C-568/17 Geelen

JUDGMENT OF THE COURT (First Chamber)

8 May 2019 ( *1 )

(Reference for a preliminary ruling — Value added tax (VAT) — Sixth Directive 77/388/EEC — Article 9(2)(c) and (e) — Directive 2006/112/EC — Article 52(a) — Article 56(1)(k) — Supply of services — Place of taxable transactions — Reference for tax purposes — Live interactive erotic webcam sessions — Entertainment activity — Definition — Place where the services are physically carried out)

In Case C‑568/17,

REQUEST for a preliminary ruling under Article 267 TFEU from the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), made by decision of 22 September 2017, received at the Court on 27 September 2017, in the proceedings

Staatssecretaris van Financiën

v

L.W. Geelen,

THE COURT (First Chamber),

composed of R. Silva de Lapuerta, Vice-President of the Court, acting as President of the First Chamber, J.-C. Bonichot, A. Arabadjiev, E. Regan (Rapporteur) and C.G. Fernlund, Judges,

Advocate General: M. Szpunar,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 19 September 2018,

after considering the observations submitted on behalf of:

the Netherlands Government, by C.S. Schillemans, M. Bulterman and J.M. Hoogveld, acting as Agents,

the French Government, by D. Colas, E. de Moustier and A. Alidière, acting as Agents,

the European Commission, by R. Troosters and R. Lyal, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 12 February 2019,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of Article 9(2)(c), 1st indent, and (e), 12th indent, of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1), as amended by Council Directive 2002/38/EC of 7 May 2002 (OJ 2002 L 128, p. 41) (‘the Sixth Directive’), Article 52(a) and Article 56(1)(k) of 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’) and Article 11 of Council Regulation (EC) No 1777/2005 of 17 October 2005 laying down implementing measures for Directive 77/388 (OJ 2005 L 288, p. 1).

2The request has been made in proceedings between the Staatssecretaris van Financiën (State Secretary for Finance, Netherlands) and Mr L.W. Geelen concerning the payment of value added tax (VAT) on the provision of live interactive erotic webcam sessions.

Legal context

EU law

The Sixth Directive

3The seventh recital of the Sixth Directive provides:

‘Whereas the determination of the place where taxable transactions are effected has been the subject of conflicts concerning jurisdiction as between the Member States, in particular as regards supplies of goods for assembly and the supply of services; whereas although the place where a supply of services is effected should in principle be defined as the place where the person supplying the services has his principal place of business, that place should be defined as being in the country of the person to whom the services are supplied, in particular in the case of certain services supplied between taxable persons where the cost of the services is included in the price of the goods’.

4In Title VI, entitled ‘Place of taxable transactions’, Article 9 of the Sixth Directive, entitled ‘Supply of services’, is worded as follows:

‘1. The place where a service is supplied shall be deemed to be the place where the supplier has established his business or 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.

2. However:

…

the place of the supply of services relating to:

cultural, artistic, sporting, scientific, educational, entertainment or similar activities, including the activities of the organisers of such activities, and where appropriate, the supply of ancillary services,

…

shall be the place where those services are physically carried out;

…

the place where the following services are supplied when performed for customers established outside the Community or for taxable persons established in the Community but not in the same country as the supplier, shall be the place where the customer has established his business or has a fixed establishment to which the service is supplied or, in the absence of such a place, the place where he has his permanent address or usually resides:

…

electronically supplied services, inter alia, those described in Annex L;

…’

Regulation No 1777/2005

5Article 11(1) of Regulation No 1777/2005 provided:

‘“Electronically supplied services” as referred to in the 12th indent of Article 9(2)(e) of [the Sixth Directive] and in Annex L to [the Sixth Directive] shall include services which are delivered over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and in the absence of information technology is impossible to ensure.’

The VAT Directive

6From 1 January 2007, the Sixth Directive was repealed and replaced by the VAT Directive.

7Article 43 of the VAT Directive, which is in Section 1, entitled ‘General Rule’, of Chapter 3, entitled ‘Place of supply of services’, which forms part of Title V of the directive, concerning the place of taxable transactions, is worded as follows:

‘The place of supply of services shall be deemed to be the place where the supplier has established his business or 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.’

8Article 52(a) of that directive, which is in Section 2 of Chapter 3, entitled ‘Particular provisions’, provides:

‘The place of supply of the following services shall be the place where the services are physically carried out:

cultural, artistic, sporting, scientific, educational, entertainment or similar activities, including the activities of the organisers of such activities and, where appropriate, ancillary services’.

9Article 56(1) of that directive, which is also in Section 2, provides:

‘The place of supply of the following services to customers established outside the Community, or to taxable persons established in the Community but not in the same country as the supplier, shall be the place where the customer has established his business or has a fixed establishment for which the service is supplied, or, in the absence of such a place, the place where he has his permanent address or usually resides:

…

electronically supplied services, such as those referred to in Annex II’.

Netherlands law

10Article 6(1), (2)(c)(1) and (d)(10) of the Wet op de omzetbelasting 1968 (Law of 1968 on Turnover Tax), in the version applicable during the period from 1 January 2006 to 31 December 2009, transposed, into Netherlands law, Article 9(1) and (2)(c), 1st indent, and (e), 12th indent, of the Sixth Directive and Article 43, Article 52(a) and Article 56(1)(k) of the VAT Directive.

The dispute in the main proceedings and the questions referred for a preliminary ruling

11Mr Geelen, who is registered in the Netherlands as a taxable person for VAT purposes, provides for consideration services consisting in the offer of live interactive erotic webcam sessions. The models filmed during those sessions are in the Philippines and work for Mr Geelen. Mr Geelen provides them with the hardware and software required to broadcast those sessions over the internet. To access the sessions at issue in the main proceedings, Mr Geelen’s customers must create an account with one of the internet service providers. Those providers receive the payments for those sessions from the customers and pay a portion of them to Mr Geelen. The sessions are interactive in the sense that each customer has the ability to communicate with the models and to make special requests to them. A single session may be viewed live by several customers simultaneously.

12Since Mr Geelen did not submit a VAT return in respect of the supply of those services, the Netherlands tax authority, taking the view that those services were subject to VAT in the Netherlands, sent Mr Geelen a notice of additional assessment for the period from 1 June 2006 to 31 December 2009.

13The Rechtbank Zeeland-West-Brabant (Zeeland-West-Brabant District Court, Netherlands) dismissed the action brought by Mr Geelen against that notice of additional assessment.

14By judgment of 30 July 2015, the Gerechtshof ’s-Hertogenbosch (Court of Appeal, ’s-Hertogenbosch, Netherlands) annulled that notice on the ground, in essence, that the supply of services at issue constituted an entertainment activity which had to be regarded as being physically carried out by the models concerned in the Philippines.

15The Staatssecretaris van Financiën has brought an appeal on a point of law against that judgment before the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), claiming that the place of supply of those services was the place where the customers were located at the time when they purchased the services concerned, that place being, in the present case, the Netherlands.

16The referring court considers that the examination of that appeal requires, first of all, an assessment as to whether the supply of services at issue constitutes an ‘entertainment activity’, within the meaning of the first indent of Article 9(2)(c) of the Sixth Directive and Article 52(a) of the VAT Directive. Admittedly, the purpose of the sessions in question is clearly to entertain the customers and the cost of the various services provided at that time are included in the price paid to access those sessions. The EU legislature specifically adopted the special rule laid down in those provisions for the supply of such complex services. However, it may be inferred from the judgments of 9 March 2006, Gillan Beach (C‑114/05, EU:C:2006:169), and of 27 October 2011, Inter-Mark Group (C‑530/09, EU:C:2011:697), that the activity concerned must be carried out over a set period, at a place where the service provider and the recipients physically meet. Nevertheless, the question arises as to whether that requirement applies in the wake of the development of the internet, which now means that services no longer have to be supplied at a specific physical location.

17Moreover, if the supply of services at issue in the main proceedings is an ‘entertainment activity’, within the meaning of those provisions, the referring court notes that the place where those services are ‘physically carried out’, within the meaning of those provisions, must be determined. While that place may, in the referring court’s view, be the place where the models perform, the view may also be taken that it is the place where the customer enjoys the entertainment activity, namely the place where he logs onto the session. In the main proceedings in the present case, the customers are all located in the Netherlands. However, since those customers could, in theory, be located anywhere, the referring court states that the question arises as to whether the connection to the place where the customers connect to the internet provides a rule which is applicable in practice and a rational solution for tax purposes.

18Furthermore, the referring court is uncertain whether the special rule applicable to electronically supplied services, set out in the 12th indent of Article 9(2)(e) of the Sixth Directive and Article 56(1)(k) of the VAT Directive, may also be taken into account. In that regard, it may be inferred from Article 11(1) of Regulation No 1777/2005 that only transactions which require minimal human intervention and which cannot be carried out in the absence of information technology fall into that category of services. According to the referring court, it follows that the supply of services at issue in the main proceedings are not electronically supplied services since the performance of the sessions, because they are broadcast live and are interactive, requires human intervention and the use of the internet.

19Finally, in the event that that supply of services does fall under the two aforementioned rules, it must be determined, where those rules lead to the designation of different places where the service is deemed to be supplied, which place must be used. Although, according to the referring court, it would appear from the judgment of 6 March 1997, Linthorst, Pouwels and Scheres (C‑167/95, EU:C:1997:105), that the order in which the situations are listed in Article 9(2) of the Sixth Directive is decisive, that judgment cannot provide any degree of certainty since the supply of services at issue in the case giving rise to that judgment could not be linked to any of the cases referred to in that provision.

20In those circumstances, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

Should the first indent of Article 9(2)(c) of the Sixth Directive … or Article 52(a) of the VAT Directive …, respectively, be interpreted as also covering the provision, in return for payment, of live interactive erotic webcam sessions?

If question 1(a) is answered in the affirmative, should the phrase “the place where those services are physically carried out” in Article 9(2)(c) of the Sixth Directive or “the place where the services are physically carried out” in the introductory sentence of Article 52 of the VAT Directive …, respectively, then be interpreted as meaning that the decisive factor is the place where the models perform in front of the webcamera or the place where the [customers] view the images, or could even some other place be envisaged?

Should the 12th indent of Article 9(2)(e) of the Sixth Directive or Article 56(1)(k) of the VAT Directive …, read in conjunction with Article 11 of [Regulation No 1777/2005], be interpreted as meaning that the provision, in return for payment, of live interactive erotic webcam sessions can be deemed to be an “electronically supplied service”?

If both question 1(a) and question 2 are answered in the affirmative, and the designation of the place of the service according to the relevant provisions of the directives concerned results in a different outcome, how should the place of the service then be determined?’

Consideration of the questions referred

The first question

21By its first question, the referring court asks, in essence, whether the first indent of Article 9(2)(c) of the Sixth Directive and Article 52(a) of the VAT Directive must be interpreted as meaning that a supply of services, such as that at issue in the main proceedings, consisting in the offer of live interactive erotic webcam sessions, constitutes an ‘entertainment activity’ within the meaning of those provisions and, if so, where must that supply of services be deemed to be ‘physically carried out’ within the meaning of those provisions.

22Since that question has been raised in the context of a tax adjustment concerning the period from 1 June 2006 to 31 December 2009, the provisions of both the Sixth Directive and the VAT Directive are applicable ratione temporis to a dispute such as that at issue in the main proceedings.

23It should be borne in mind that Article 9 of the Sixth Directive contains rules for determining the place where services are deemed to be supplied for tax purposes. Whereas Article 9(1) lays down a general rule on the matter, Article 9(2) sets out a number of specific instances of places where certain services are deemed to be supplied. The object of those provisions is to avoid, first, conflicts of jurisdiction, which may result in double taxation, and, secondly, non-taxation (judgments of 26 September 1996, Dudda, C‑327/94, EU:C:1996:355, paragraph 20; of 9 March 2006, Gillan Beach, C‑114/05, EU:C:2006:169, paragraph 14; of 6 November 2008, Kollektivavtalsstiftelsen TRR Trygghetsrådet, C‑291/07, EU:C:2008:609, paragraph 24; and of 3 September 2009, RCI Europe, C‑37/08, EU:C:2009:507, paragraph 20).

24It follows from settled case-law that Article 9(1) of the Sixth Directive in no way takes precedence over Article 9(2). It must be asked, in every situation, whether that situation corresponds to one of the instances mentioned in Article 9(2) of that directive. If not, that situation falls within the scope of Article 9(1) of the directive (judgments of 12 May 2005, RAL (Channel Islands) and Others, C‑452/03, EU:C:2005:289, paragraph 24; of 9 March 2006, Gillan Beach, C‑114/05, EU:C:2006:169, paragraph 15; and of 6 November 2008, Kollektivavtalsstiftelsen TRR Trygghetsrådet, C‑291/07, EU:C:2008:609, paragraph 25).

25It follows that Article 9(2) of the Sixth Directive must not be regarded as an exception to a general rule which must be narrowly construed (judgment of 27 October 2005, Levob Verzekeringen and OV Bank, C‑41/04, EU:C:2005:649, paragraph 34).

26The first indent of Article 9(2)(c) of the Sixth Directive provides that the place of the supply of services relating, inter alia, to ‘entertainment or similar activities’, including, where appropriate, the supply of ancillary services, is the place where those services are physically carried out. The EU legislature considered that, where the supplier provides his services in the State in which such services are physically carried out and the organiser of the event charges the final consumer VAT in the same State, the VAT charged on the basis of all those services the cost of which is included in the price of the complete service paid for by that consumer must be paid to that State, regardless of where the supplier of the service has established his business (see, to that effect, judgments of 26 September 1996, Dudda, C‑327/94, EU:C:1996:355, paragraph 24, and of 9 March 2006, Gillan Beach, C‑114/05, EU:C:2006:169, paragraphs 18 and 22).

27Article 9(1) and the first indent of Article 9(2)(c) of the Sixth Directive correspond, respectively, to Article 43 and Article 52(a) of the VAT Directive.

28Since the wording of the latter provisions is, essentially, identical to that of the corresponding provisions in the Sixth Directive, they must be interpreted in the same way (see, by analogy, judgment of 6 November 2008, Kollektivavtalsstiftelsen TRR Trygghetsrådet, C‑291/07, EU:C:2008:609, paragraph 23).

29The first question referred by the national court must be answered in the light of those principles.

30As regards, in the first place, the nature of the services, it is clear from the actual wording of Article 9(2)(c) of the Sixth Directive that, as the Court has previously held, to fall within the scope of that provision, the principal objective of a supply of services must be, inter alia, entertainment (see to that effect, judgments of 26 September 1996, Dudda, C‑327/94, EU:C:1996:355, paragraph 26, and of 12 May 2005, RAL (Channel Islands) and Others, C‑452/03, EU:C:2005:289, paragraph 31).

31In that regard, the Court has stipulated that no particular artistic level is required and it is not only services relating, inter alia, to entertainment activities, but also services relating merely to similar activities that fall within the scope of Article 9(2)(c) of the Sixth Directive (judgments of 26 September 1996, Dudda, C‑327/94, EU:C:1996:355, paragraph 25; of 12 May 2005, RAL (Channel Islands) and Others, C‑452/03, EU:C:2005:289, paragraph 32; and of 9 March 2006, Gillan Beach, C‑114/05, EU:C:2006:169, paragraph 19).

32In the present case, it is clear from the information in the order for reference that the supply of services at issue in the main proceedings is complex in nature since it consists of a number of activities. On the one hand, the models in the Philippines participate in erotic shows. On the other hand, those models are the focus of interactive sessions, which are available live on the internet, organised by Mr Geelen from the Netherlands, where he has established his business, the purpose of which is to allow customers not only to view those sessions, but also to interact with the models so that they are able to influence the performance of those shows and to steer them according to their wishes.

33In that regard, it has been established that those shows are performed by models in the context of an employment relationship between the models and the organiser of the shows. Moreover, since the organiser receives the payment required to view the interactive sessions via internet service providers, with whom the customers must create an account, it is apparent that the organiser has also put into place the technical, organisational and contractual framework required for access to those sessions, which is restricted to those paying customers. In particular, it is apparent from the information before the Court that that organiser provides the models with the software required for internet broadcasts.

34It follows that the interactive sessions at issue in the main proceedings are not comparable to conventional cultural events, such as a concert, a fair or an exhibition, since, by the service he offers, Mr Geelen is not seeking to provide access to services which are provided at a specific location for a specified period; rather he organises and enables, simultaneously, the creation and broadcast of a category of shows which may take place at any time and in any location, in interactive sessions which are available on the internet.

35Therefore, in order to determine the nature of the supply of services at issue in the main proceedings, the service concerned, as provided by Mr Geelen, must be assessed.

36In the present case, it is common ground that the objective of that service is to provide recipients with a source of entertainment.

37It follows, as the Netherlands and French Governments and the European Commission have submitted, that a supply of services of that kind must be regarded as an ‘entertainment activity’ that falls within the scope of the first indent of Article 9(2)(c) of the Sixth Directive.

38It is irrelevant, in that regard, that those entertainment services are not provided in the physical presence of the recipients and that the recipients do not receive those services from a single location.

39Admittedly, the Court has previously held that the various categories of supplies of services set out in Article 9(2)(c) of the Sixth Directive have, in particular, the common feature that they are usually provided for specific events, and the place where those services are physically carried out is easy to identify, as a rule, since such events take place at specific locations (see, to that effect, judgments of 9 March 2006, Gillan Beach, C‑114/05, EU:C:2006:169, paragraphs 24 and 25, and of 27 October 2011, Inter-Mark Group, C‑530/09, EU:C:2011:697, paragraph 23).

40However, although that is generally the case, nothing in the wording of Article 9(2)(c) of the Sixth Directive is capable of suggesting that the application of that provision is necessarily limited to the supply of services provided for such events only.

41On the contrary, as is clear from paragraph 30 of this judgment, a supply of services falls within the scope of that provision solely because the principal objective pursued by that supply is, in particular, entertainment and, accordingly, by virtue of its intrinsic nature.

42Therefore, in the absence of any express provision in Article 9(2)(c) of the Sixth Directive that the place where the entertainment activity is physically carried out must be easily identifiable or specific, it must be concluded that the neither the fact that services are not provided in the physical presence of the recipients, nor the fact that those recipients do not receive those services from a single location are such as to prevent the application of that provision.

43In those circumstances, it must be determined, in the second place, where a supply of services, such as that at issue in the main proceedings, must be regarded as being ‘physically carried out’ within the meaning of Article 9(2)(c) of the Sixth Directive.

44According to the Commission, the place where live interactive erotic webcam sessions, such as those at issue in the main proceedings, are physically carried out necessarily corresponds to the place where the show is physically performed by the models. On the other hand, the Netherlands and French Governments consider that that place, in view of technological developments, must be regarded as being the place where the customer is able to access that show. That latter interpretation is consistent with the underlying logic of VAT rules regarding the place of supply, in accordance with which services must be taxed, as far as possible, at the place where they are used by their recipients.

45It is true that the models who participate in the show which is the subject of the live interactive erotic webcam sessions at issue in the main proceedings are physically located in the Philippines.

46However, as noted in paragraphs 32 to 34 above, the supply of services at issue in the main proceedings, which consists in organising and offering live interactive erotic webcam sessions, is a complex supply which is rendered not by the models, but by Mr Geelen, who organises those sessions.

47As the Advocate General observed in point 50 of his Opinion, since the activities necessary for the supply of those complex services are concentrated in the place from which the provider, on the one hand, organises the interactive sessions relating to the erotic show performed by the models and, on the other hand, provides customers with the opportunity to view those sessions on the internet, from the place of their choice, and to interact with those models, such a complex supply of services must be regarded as being ‘physically carried out’, within the meaning of Article 9(2)(c) of the Sixth Directive, in the place where that service is supplied by that provider, namely, in the case in the main proceedings, the place where his business is established: the Netherlands.

48Although that place of reference corresponds, in the present case, to that identified in Article 9(1) of that directive, it should be recalled that, as noted in paragraph 25 above, Article 9(2) of the Sixth Directive must not be regarded as laying down an exception to a general rule.

49Therefore, even though the latter provision, as is clear from the seventh recital of the Sixth Directive and as noted by all of the interested parties which have submitted observations in the present proceedings, where appropriate, makes it possible to ensure that the services concerned are subject to the VAT regime of the Member State in the territory of which those services are used by their recipients (see, to that effect, judgment of 12 May 2005, RAL (Channel Islands) and Others, C‑452/03, EU:C:2005:289, paragraph 33), the fact remains that there is nothing to suggest that the place where the services at issue in the main proceedings are physically carried out may not be the same, in the light of the circumstances of the case, as the Member State in which the supplier of the services is established.

50That interpretation applies a fortiori in the circumstances of the main proceedings in the present case, in so far as it provides a useful point of reference which leads to a rational result for tax purposes (see, to that effect, judgment of 4 July 1985, Berkholz, 168/84, EU:C:1985:299, paragraphs 17 and 18).

51Such an interpretation is consistent with the objective pursued by Article 9 of the Sixth Directive, which, as pointed out in paragraph 23 above, is to lay down a conflict of laws rule to avoid the risk of double taxation or non-taxation, and facilitates the implementation of the conflict of laws rule laid down in Article 9(2)(c) of the Sixth Directive, in that it serves the interests of simplicity of administration — of the rules on the place of supply of services — as regards the rules governing the collection of taxes (see, by analogy, judgment of 6 November 2008, Kollektivavtalsstiftelsen TRR Trygghetsrådet, C‑291/07, EU:C:2008:609, paragraphs 30 and 31).

52Moreover, having regard to the fact pointed out by the referring court, mentioned in paragraph 17 above, that all of Mr Geelen’s customers are in the Netherlands, it is apparent that, in the present case, that interpretation also makes it possible to ensure that the services concerned are subject to the VAT regime of the Member State in the territory of which those services are used by their recipients.

53In the light of the foregoing considerations, the answer to the first question is that the first indent of Article 9(2)(c) of the Sixth Directive and Article 52(a) of the VAT Directive must be interpreted as meaning that a complex supply of services, such as that at issue in the main proceedings, consisting in the offer of live interactive erotic webcam sessions constitutes an ‘entertainment activity’ within the meaning of those provisions, which must be regarded as being ‘physically carried out’ within the meaning of those provisions at the place where the supplier has established his business or a fixed establishment from which those services are supplied or, in the absence of such a place, the place where he has his permanent address or usually resides.

The second question

54By its second question, the referring court asks, in essence, whether the 12th indent of Article 9(2)(e) of the Sixth Directive and Article 56(1)(k) of the VAT Directive, read in conjunction with Article 11 of Regulation No 1777/2005, must be interpreted as meaning that a supply of services, such as that at issue in the main proceedings, consisting in the offer of live interactive erotic webcam sessions must be deemed to relate to an ‘electronically supplied service’ within the meaning of those provisions.

55It should be noted that the 12th indent of Article 9(2)(e) of the Sixth Directive determines the place of supply of electronically supplied services, as regards the services referred to in Annex L to that directive and in Article 11 of Regulation No 1777/2005, where those services are supplied to recipients established outside the European Union or to taxable persons established in the European Union but not in the same country as the supplier.

56The 12th indent of Article 9(2)(e) of the Sixth Directive corresponds to Article 56(1)(k) of the VAT Directive. Since the wording of those provisions is, in essence, identical, they must, in accordance with the case-law cited in paragraph 28 above, be interpreted in the same way.

57However, it is clear from the information in the order for reference, referred to in paragraph 17 above, that the services at issue in the main proceedings were supplied to customers who were all located in the Netherlands.

58In those circumstances, there being no need to determine whether a service such as that at issue in the main proceedings must be regarded as an ‘electronically supplied service’ referred to in Annex L to the Sixth Directive and in Article 11 of Regulation No 1777/2005, it must be held that the 12th indent of Article 9(2)(e) of that directive is not intended to apply in a case such as that in the main proceedings.

59Consequently, the answer to the second question is that the 12th indent of Article 9(2)(e) of the Sixth Directive and Article 56(1)(k) of the VAT Directive, read in conjunction with Article 11 of Regulation No 1777/2005, must be interpreted as meaning that a supply of services, such as that at issue in the main proceedings, consisting in the offer of live interactive erotic webcam sessions does not fall within the scope of those provisions where those services have been supplied to recipients who are all located in the Member State of the supplier of those services.

The third question

60In the light of the answer to the second question, there is no need to answer the third question.

Costs

61Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (First Chamber) hereby rules:

The first indent of Article 9(2)(c) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, as amended by Council Directive 2002/38/EC of 7 May 2002, and Article 52(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that a complex supply of services, such as that at issue in the main proceedings, consisting in the offer of live interactive erotic webcam sessions constitutes an ‘entertainment activity’, within the meaning of those provisions, which must be regarded as being ‘physically carried out’ within the meaning of those provisions at the place where the supplier has established his business or a fixed establishment from which those services are supplied or, in the absence of such a place, the place where he has his permanent address or usually resides.

The 12th indent of Article 9(2)(e) of Sixth Directive 77/388, as amended by Directive 2002/38, and Article 56(1)(k) of Directive 2006/112, read in conjunction with Article 11 of Council Regulation (EC) No 1777/2005 of 17 October 2005 laying down implementing measures for Directive 77/388, must be interpreted as meaning that a supply of services, such as that at issue in the main proceedings, consisting in the offer of live interactive erotic webcam sessions does not fall within the scope of those provisions where those services have been supplied to recipients who are all located in the Member State of the supplier of those services.

Signatures

[Signatures]

( *1 ) Language of the case: Dutch.

OPINION OF ADVOCATE GENERAL

SZPUNAR

delivered on 12 February 2019 ¹

(Reference for a preliminary ruling – Taxation – Common system of value added tax (VAT) – Directive 77/388/EEC – Article 9(2)(c) and (e) – Directive 2006/112/EC – Article 52(a) – Article 56(1)(k) – Supply of services – Place of taxable transactions – Criterion for determining fiscal competence – Live interactive erotic webcam sessions – Place where the service is physically carried out)

Introduction

1Value added tax (‘VAT’) is a consumption tax, and should therefore ideally be levied at the place where the taxable goods or services are consumed. However, in the case of cross-border transactions, especially those involving the provision of services, this entails substantial administrative burdens both for taxable persons and tax authorities. Therefore, the EU VAT Directives have introduced simplified methods for determining the place where services are deemed to be supplied. The determination of that place still poses certain difficulties, however, particularly in the case of complex services and services provided at a distance, such as, in the present case, via web streaming. Regulatory developments in this area have not always kept pace with technological developments and changing market conditions. It is therefore for the courts to interpret the rules in light of technological developments.

Legal framework

EU legislation

2Pursuant to Article 9 of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, ² as amended by Council Directive 2002/38/EC of 7 May 2002: ³

‘1. The place where a service is supplied shall be deemed to be the place where the supplier has established his business or 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.

2. However:

…

the place of the supply of services relating to:

cultural, artistic, sporting, scientific, educational, entertainment or similar activities, including the activities of the organisers of such activities, and where appropriate, the supply of ancillary services,

…

shall be the place where those services are physically carried out;

…

the place where the following services are supplied when performed for customers established outside the Community or for taxable persons established in the Community but not in the same country as the supplier, shall be the place where the customer has established his business or has a fixed establishment to which the service is supplied or, in the absence of such a place, the place where he has his permanent address or usually resides:

…

electronically supplied services, inter alia, those described in Annex L;

the place where services referred to in the last indent of subparagraph (e) are supplied when performed for non-taxable persons who are established, have their permanent address or usually reside in a Member State, by a taxable person who has established his business or has a fixed establishment from which the service is supplied outside the Community or, in the absence of such a place of business or fixed establishment, has his permanent address or usually resides outside the Community, shall be the place where the non-taxable person is established, has his permanent address or usually resides.

…’.

3Article 43 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, ⁴ in the version applicable to the facts in the main proceedings, provides:

‘The place of supply of services shall be deemed to be the place where the supplier has established his business or 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’.

4Pursuant to Article 52(a) of Directive 2006/112:

‘The place of supply of the following services shall be the place where the services are physically carried out:

cultural, artistic, sporting, scientific, educational, entertainment or similar activities, including the activities of the organisers of such activities and, where appropriate, ancillary services;

…’.

5Pursuant to Article 56(1)(k) of that directive:

‘1. The place of supply of the following services to customers established outside the Community, or to taxable persons established in the Community but not in the same country as the supplier, shall be the place where the customer has established his business or has a fixed establishment for which the service is supplied, or, in the absence of such a place, the place where he has his permanent address or usually resides:

…

electronically supplied services, such as those referred to in Annex II;

…’.

6Finally, Article 57(1) of Directive 2006/112 provides:

‘Where the services referred to in point (k) of Article 56(1) are supplied to non-taxable persons who are established in a Member State, or who have their permanent address or usually reside in a Member State, by a taxable person who has established his business outside the Community or has a fixed establishment there from which the service is supplied, or who, in the absence of such a place of business or fixed establishment, has his permanent address or usually resides outside the Community, the place of supply shall be the place where the non-taxable person is established, or where he has his permanent address or usually resides’.

Netherlands law

7The above provisions of EU law were transposed into Netherlands law in Article 6(1) and Article 6(2)(c)(1) and (d)(10) of the Wet op de omzetbelasting 1968 (1968 Law on Turnover Tax).

Facts, procedure, and questions referred

8The defendant in the main proceedings, Mr L. W. Geelen, is a taxable person registered for VAT in the Netherlands. He provides services consisting in the organisation and provision of live interactive erotic webcam sessions. The models performing during those sessions are at that time in the Philippines. Mr Geelen provides the models with the hardware and software required for streaming the sessions over the internet. Customers contact the models online after creating an account with an internet service provider for that purpose. These providers charge customers a fee, part of which goes to L. W. Geelen. The sessions are streamed live and are interactive, meaning that customers are able to communicate with the models and ask them to do things. The services provided by Mr Geelen are, in the main, directed at the Netherlands market. ⁵

9The defendant in the main proceedings did not submit VAT returns in respect of the above services. The tax authority, however, considered these services to be subject to VAT in the Netherlands and issued a notice of additional assessment to tax for the period from 1 June 2006 to 31 December 2009.

10That notice was annulled by judgment of the court of first instance, which held that the services in question were subject to the provisions of Netherlands law transposing the first indent of Article 9(2)(c) of Directive 77/388 and Article 52(a) of Directive 2006/112 and that they were physically carried out in the Philippines. The tax authority lodged an appeal in cassation against that judgment with the referring court.

11In those circumstances, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

Should the first indent of Article 9(2)(c) [of Directive 77/388], or Article 52(a) [of Directive 2006/112], respectively, be interpreted as also covering the provision, in return for payment, of live interactive erotic webcam sessions?

If question 1(a) is answered in the affirmative, should the phrase “the place where those services are physically carried out” in Article 9(2)(c) [of Directive 77/388] or “the place where the services are physically carried out” in the introductory sentence of Article 52 [of Directive 2006/112], respectively, then be interpreted as meaning that the decisive factor is the place where the models perform in front of the web camera or the place where the [customer] view the images, or could even some other place be envisaged?

Should the twelfth indent of Article 9(2)(e) [of Directive 77/388] or Article 56(1)(k) [of Directive 2006/112] read in conjunction with Article 11 [of Regulation 1777/2005 ⁶], be interpreted as meaning that the provision, in return for payment, of live interactive erotic webcam sessions can be deemed to be an “electronically supplied service”?

If both question (1a) and question (2) are answered in the affirmative, and the designation of the place of the service according to the relevant provisions of the directives concerned results in a different outcome, how should the place of the service then be determined?’

12The request for a preliminary ruling was received by the Court on 27 September 2017. Written observations were submitted by the Netherlands and French Governments and the European Commission. The Netherlands Government and the Commission were represented at the hearing on 19 September 2018

Analysis

First question, part (a)

13By part (a) of its first question, the referring court seeks to ascertain whether services such as those provided by Mr Geelen at issue in the main proceedings fall within Article 9(2)(c) of Directive 77/388 and Article 52(a) of Directive 2006/112. Specifically, the question is whether these services relate to entertainment activities within the meaning of those provisions.

14There seems to be no doubt that the services in question are to do with entertainment. ⁷ That, in my view, does not require further discussion. However, this does not provide an exhaustive answer to part (a) of the first question,.

15In my view, the referring court rightly raises the question of whether the aforementioned provisions apply to services which, while providing a form of entertainment, are not performed at a single place and time and with the customers physically present but, for example, as in the present case, at a distance and at a time chosen individually by each customer.

16The provision in the first indent of Article 9(2)(c) has been in Directive 77/388 since its adoption. It is beyond dispute, in my opinion, that when formulating that provision the legislature did not have in mind services provided at a distance, such as the services at issue in the main proceedings, since such services did not exist at that time. The only ways of providing cultural, entertainment, educational and similar services were to either bring the customers together at the place where the services were physically carried out or to supply them at the place where the customers were located. ⁸ Therefore, it was not difficult to determine the place where the services were physically carried out. This was also the place of consumption of the services.

17However, the technological progress that has taken place since that time has led to the emergence of services that allow customers to participate, sometimes even actively, in a cultural, entertainment or other event, at a distance and not necessarily in real time. Thus, the ‘unity of action, time and place’, to use a reference to classical theatre, is disrupted. The question therefore arises as to whether the possible application to such services of the first indent of Article 9(2)(c) of Directive 77/388 and Article 52(a) of Directive 2006/112 is in accordance with the intention of the EU legislature, as that intention should be interpreted in the context of the new technological developments, and with the objectives of those provisions.

18A good starting point for the analysis of the objectives to be served by the rules governing the place of supply of services is the explanatory memorandum to the draft of Directive 2008/8/EC. ⁹ That directive introduced a fundamental reform of EU law as regards the determination of the place of supply of services for VAT purposes.

19In the introductory part of the explanatory memorandum, the Commission notes that the most desirable situation is that in which services are taxed at the place where the actual consumption takes place. This framework is nevertheless hindered by serious practical difficulties where the services are supplied on a cross-border basis. These difficulties can be overcome relatively easily in the case of services supplied to taxable persons. This is achieved mainly through the so-called reverse charge mechanism. ¹⁰ However, this mechanism cannot be applied to non-taxable persons. An alternative would be to oblige service providers to register and account for VAT in each Member State where services are supplied; however, this would impose an excessive administrative burden on them. In addition, in the case of many services, the place of actual consumption is not the place where the services are physically carried out, but rather the place of establishment or residence of the customer, which complicates the matter further by requiring the supplier to identify the customer’s place of residence and account for VAT at that place in each case. ¹¹ Because of these practical difficulties, the general principle adopted in Directive 77/388 was that the place of supply of services is the place where the supplier is established. In the draft discussed here, the Commission proposed to maintain this general principle for services supplied to non-taxable persons.

20There are, however, exceptions to that rule. One of these is the exception concerning cultural, entertainment, education and similar activities, which is of interest in this case. The introduction of this exception achieved two objectives.

21Firstly, where the activity concerned required the simultaneous physical presence of both customers and suppliers (or in any event the persons providing the service on their behalf) in one place, it was possible to achieve the most desirable solution by taxing the service at the place of its actual consumption without excessive administrative difficulties, since such services are of a one-off nature in that their economic purpose is usually limited to the duration of the service. As a result, the consumption of such services is immediate and occurs at the place where they are supplied. The place of establishment or residence of the customer is therefore immaterial; the supplier only accounts for VAT at the place where the service is physically carried out.

22Secondly, such services are often complex in nature, since they require a range of intermediate and ancillary services, some of which may be provided directly to final customers, and others, for example, to organisers of the events which comprise the final services. The price of such services may or may not be a component of the overall price of the final service. They may also be supplied by different service providers. ¹² Therefore, the application of the general principle of taxation at the place of establishment of the supplier could result in the need to account for VAT on the individual components of the overall service in different Member States. Taxation of these services at the place where they are physically carried out simplifies the case where this place coincides with the place of supply of the final or main service.

23However, the application of this exception to services provided at a distance, such as those at issue in the main proceedings, does not achieve those objectives.

24Where the supply of services does not require the simultaneous physical presence of suppliers and customers in the same place, the problem of determining the place where the service is physically carried out arises, which is the subject of part (b) of the first question. However, irrespective of the solution adopted to this problem, the objectives of the exception in question are not achieved.

25For if we accept, taking as an example the services at issue in the main proceedings, that the place where the service is carried out is the place where the models perform in front of the camera, the desired result of taxation at the place of consumption is not achieved. This is because the place of consumption is, obviously, the place where the customers are located at the time when they use the service. Moreover, the place of supply of services determined in this manner may, as in the present case, not coincide with the place of establishment of the supplier, or even be completely outside the territorial scope of the common system of VAT. As a result, not only will the service not be taxed at the place of consumption, which was the purpose of that exception, but the general principle of taxation at the place of establishment of the supplier will not apply either.

26On the other hand, if the place where viewers are located at the time when they use such services was deemed to be the place where such services are physically carried out, that would allow those services to be taxed at the place of consumption. This, however, has the potential to create precisely those practical difficulties which the EU legislature sought to avoid by introducing the general principle of taxation at the place of establishment of the supplier, and which arise from the need to identify the place where the service is used by the customer in each case and account for VAT at that place.

27Although the Netherlands Government points in its observations to the arrangements proposed in Directive (EU) 2017/2455 ¹³ which are intended to address these practical difficulties, that Government itself notes that these arrangements will only apply to services such as those at issue in the main proceedings from 2021, whereas the present case concerns a legal situation which existed between 2006 and 2009.

28It follows from the foregoing that the application of the special criterion for determining the place of supply of services provided for in the first indent of Article 9(2)(c) of Directive 77/388 and Article 52(a) of Directive 2006/112 to services provided at a distance, such as those at issue in the main proceedings, does not achieve the objectives which the EU legislature intended to achieve by introducing those provisions. It is therefore necessary, in my view, to look elsewhere, and return to the general principle of taxation at the place of establishment of the supplier.

29It is true that in some cases the application of that principle to services provided at a distance, and in particular online services, may lead to an imperfect distribution of tax powers between the Member States, as it potentially enables the place of taxation to be easily separated from the place of consumption of the service (although that does not appear to be the case here). However, as is apparent from the explanatory memorandum to the draft of Directive 2008/8, the EU legislature was already aware of this problem when preparing the directive, but nevertheless decided to postpone its solution in respect of services supplied to non-taxable persons within the territory of the European Union pending the implementation of the arrangements referred to in point 27 above.

30The position according to which the purpose of the rules contained in the first indent of Article 9(2)(c) of Directive 77/388 and Article 52(a) of Directive 2006/112 was to determine the place of supply of services which require the simultaneous presence of suppliers and customers also appears to be supported by the current wording of the provisions in question.

31In the current version of Directive 2006/112, ¹⁴ that provision is contained in Article 53 and Article 54(1). According to Article 53 of that directive, which concerns services supplied to taxable persons, ‘the place of supply of services in respect of admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events, such as fairs and exhibitions, and of ancillary services related to the admission, supplied to a taxable person, shall be the place where those events actually take place’. ¹⁵ This provision, therefore, does not refer to any kind of cultural, entertainment or similar services, but to services in the form of events, such as fairs or exhibitions, that is, those which require the presence of customers at the place where the services are supplied.

32It is true that Article 54(1) of Directive 2006/112, which refers to the supply of the same services to non-taxable persons, does not use the word ‘events’. ¹⁶ However, that provision, like Article 53 of the directive in question, also specifies that it concerns activities ‘such as fairs and exhibitions’, and thus also activities which require the presence of customers at the place where the service is supplied.

33In my opinion, the difference in the wording of these provisions stems from the fact that the current Article 53 of Directive 2006/112 defines the place of supply of a very narrow category of services, namely services which consist in allowing admission to various types of events, such as fairs and exhibitions, and services closely related thereto. The admission fee to such events is usually paid through the purchase of tickets. These tickets are usually sold on a mass scale and are often sold through intermediaries, making it very difficult, if not impossible, to distinguish between buyers who are taxable persons and buyers who are not. Therefore, the legislature has made the place of supply of services related to admission to events supplied to both taxable persons and to non-taxable persons the same in order to avoid difficulty in taxing such services. However, the place of supply of any ancillary services relating to cultural, entertainment and similar activities differs according to the status of the customer: where services are supplied to non-taxable persons, the place of supply is still the place where the service is physically carried out pursuant to the current Article 54(1) of Directive 2006/112, whereas in the case of services supplied to taxable persons, it is the place where the customer has established his business or the customer’s fixed establishment under the new general rule set out in the current Article 44 of Directive 2006/112. Therefore, the place where sound engineering services are supplied, for example, such as in Dudda, ¹⁷ would under the rules currently in force be the place of establishment of the organiser of a concert rather than the place where the concert is held.

34In my view, however, this does not change the fact that the two provisions cited above concern the same type of service, namely activities ‘such as fairs and exhibitions’, that is, services requiring the physical presence of the customers at the place where the service is supplied. The scope of the current Article 54(1) of Directive 2006/112 is no broader than the scope of Article 53 as far as the categories of activities covered by it are concerned. Article 53 excludes from the scope of the previous rule only services supplied to taxable persons which do not directly involve giving admission to cultural, entertainment and similar events. However, apart from this exclusion, the services covered are still the same services as referred to in the first indent of Article 9(2)(c) of Directive 77/388 and in Article 52(a) of Directive 2006/112 in the version applicable to the main proceedings. Services provided at a distance are not covered by those provisions.

35I therefore propose that the Court’s answer to part (a) of the first question should be that Article 9(2)(c) of Directive 77/388 and Article 52(a) of Directive 2006/112 must be interpreted as meaning that services consisting in the organisation and provision of live interactive erotic webcam sessions are not entertainment activities within the meaning of those provisions.

First question, part (b)

36The answer that I propose to part (a) of the first question renders part (b) of that question irrelevant. However, in the event that the Court does not accept my proposed answer to part (a) of the first question I shall analyse part (b) of that question below.

37By part (b) of its first question, the referring court seeks to ascertain whether, in the case of services provided at a distance, such as the live interactive erotic webcam sessions at issue in the main proceedings, it is the place where the models are physically present during the session or the place where the customers use these services that must be regarded as ‘the place where those services are physically carried out’ within the meaning of Article 9(2)(c) of Directive 77/388 or ‘the place where the services are physically carried out’ within the meaning of Article 52(a) of Directive 2006/112.

38At the outset, I would like to point out that, in my opinion, any differences which may exist between the different language versions of the two directives with respect to the wording of Article 9(2)(c) of Directive 77/388 and the wording of Article 52(a) of Directive 2006/112, to which the referring court also draws attention with regard to the Dutch version, do not alter the meaning of those provisions. Those two provisions must therefore be interpreted in the same way.

39The Netherlands and French Governments propose that the answer to the question should be that the place where the services are physically carried out is the place where the customers use these services, which in this case is, in principle, the territory of the Netherlands.

40In the Commission’s view, however, this approach is dictated by the result which it is intended to achieve, namely, the taxation of the service in question in the Netherlands, but this does not follow from the wording of the provisions analysed. While the Commission shares the view that it would be reasonable to tax those services in the Netherlands, it nevertheless recognises that, though it may be harsh, it is the law (dura lex sed lex): the wording of the relevant provisions points to the place where the models perform, in this case the Philippines.

41This dilemma perfectly illustrates the difficulties involved in trying to apply the rules in question to situations which they were not designed to cover, namely, to services provided at a distance. Unlike services which require the simultaneous presence of the supplier and customer in one place, in the case of services provided at a distance there is, by definition, no single place which can be clearly and unequivocally regarded as the place of supply of the services, since the very essence of these services lies in the fact that they are supplied in at least two different places and, more specifically, from one place to another.

42However, I believe that in order to resolve this dilemma it is necessary to answer two questions: who is the supplier in this case and what the service actually involves.

43As regards the first question, it appears from the information included in the request for a preliminary ruling that the models are employed by Mr Geelen. Although the referring court does not specify the precise nature of their employment, in my opinion it may reasonably be concluded that the models do not provide services directly to Mr Geelen’s customers. Mr Geelen is therefore the supplier; it is he who charges the price for his service ¹⁸ and it is the taxation of the service supplied by him that is the subject of the main proceedings.

44This service is described in the request for a preliminary ruling as the provision of live interactive erotic webcam sessions. There appear to be two essential elements to a service defined in this manner: erotic sessions as such (i.e. performances by the models) and their streaming over the internet together with the enabling of interactive communication.

45Both these elements combine to make up a single, indivisible service. Mr Geelen does not merely provide performances by the models, since such a service would be of no value to his customers given that the latter are located in the Netherlands, while the models are in the Philippines. Nor is Mr Geelen’s role limited to mediation in the streaming of these sessions, as he also organises the sessions in which the models perform and provides them with the necessary hardware and, it is reasonable to assume, pays them remuneration.

46Both of these elements are equally important, since without either of them the service would not make economic sense and would in any event be a completely different service.

47Returning to the provisions that are at issue in the present case, it should be noted that they concern services which relate to entertainment, cultural or similar activities. However, as the place of supply of those services, those provisions indicate not the place where those activities are carried out, but rather the place where the service is supplied. The place where the activity which is the subject of the service, in this case entertainment activity in the form of performances by models, is carried out is therefore not sufficient for the purpose of determining the place where the service is carried out if other, equally important, elements of the service are supplied elsewhere.

48Therefore, I do not share the Commission’s view that the place where the models perform must be considered to be the place of supply of the services at issue in the main proceedings. This is because this view completely disregards the fact that the economic value of this service for customers consists in their ability to use it at a location of their choice, including, inter alia, their place of residence, and that from that point of view, the fact that the session can be streamed is as important a part of the service as the models’ performances.

49However, it is just as difficult to accept, as the Netherlands and French Governments argue, that the place where customers use the service is the place where the service is physically carried out, since none of the activities which comprise the service are actually performed there.

50Therefore, the obvious answer to the question of where a service consisting, on the one hand, in the organisation of performances by models in erotic sessions, and on the other, in enabling those sessions to be viewed anywhere via the internet and also enabling interactive communication with the models, is physically carried out is that that place is the place of establishment of the supplier, namely Mr Geelen in this case, since that place is the focus of all activities, performed at a distance, which are necessary for the supply of those services.

51I therefore take the view that, in the case of services provided at a distance, that is, those which do not require the presence of the customer at the place where the activities comprising the service are physically carried out, the place of establishment of the supplier must be regarded as the place where that service is physically carried out within the meaning of Article 9(2)(c) of Directive 77/388 and Article 52(a) of Directive 2006/112. I should emphasise here that the place in question is the place of establishment of the supplier rather than of the persons whom the supplier may have employed to provide certain component services which make up that service.

52It is not difficult to see that this conclusion calls into question the point of applying to such services the exception contained in Article 9(2)(c) of Directive 77/388 and in Article 52(a) of Directive 2006/112, since it leads in practice to the same result as applying the general principle of taxation at the place of establishment of the supplier. However, this is due to the fact that these rules are not applicable in the case of services provided at a distance, as I have attempted to demonstrate in my analysis of part (a) of the first question.

53Nor does this interpretation automatically result in taxation at the place of consumption, since that place may, in the case of services provided at a distance, be different from the place of establishment of the supplier. However, as I pointed out in the part of this opinion concerning the answer to part (a) of the first question, in respect of services provided to non-taxable persons, the EU legislature considered preventing difficulties and administrative burdens for taxable persons to be more important than taxing those services at the place of consumption. ¹⁹ In contrast to the solution proposed by the Netherlands and French Governments, ²⁰ my proposed solution avoids these difficulties and burdens.

54In view of the above, should the Court not accept my proposed answer to part (a) of the first question, I propose that the answer to part (b) of the first question should be that Article 9(2)(c) of Directive 77/388 and Article 52(a) of Directive 2006/112 must be interpreted as meaning that, in the case of services provided at a distance, that is, services not requiring the customer’s presence at the place where the activities comprising the service are physically carried out, the place of establishment of the supplier must be regarded as the place where such a service is physically carried out within the meaning of those provisions.

Questions 2 and 3

55By its second and third questions, the referring court seeks to ascertain whether services such as those at issue in the main proceedings can be considered to be electronically supplied services within the meaning of the last indent of Article 9(2)(e) of Directive 77/388 and Article 56(1)(k) of Directive 2006/112 and, if so, how the place of supply of those services is to be determined if that classification coincides with the classification of those services as covered by Article 9(2)(c) of Directive 77/388 and Article 52(a) of Directive 2006/112.

56It should be noted, in any event, that Article 9(2)(e) of Directive 77/388 governs the determination of the place of supply of the services listed in that provision that ‘are supplied when performed for customers established outside the Community or for taxable persons established in the Community but not in the same country as the supplier’. Additionally, Article 9(2)(f) of the directive governs the determination of the place of supply of the services referred to in the last indent of point (e) of that provision (namely, electronically supplied services) ‘supplied when performed for non-taxable persons who are established, have their permanent address or usually reside in a Member State, by a taxable person who has established his business or has a fixed establishment from which the service is supplied outside the Community or, in the absence of such a place of business or fixed establishment, has his permanent address or usually resides outside the Community’.

57Article 56(1) and Article 57(1) of Directive 2006/112 have the same scope.

58Thus, these provisions apply to: the ‘export of services’, that is to say, the supply of services to customers established or residing outside the European Union, the cross-border supply of services within the territory of the European Union to taxable persons, and the ‘import of services’ which are supplied to non-taxable persons by taxable persons who have a place of business or establishment or reside outside the European Union.

59However, the main proceedings concern the supply of services to non-taxable persons resident in the Netherlands by a taxable person who is also resident in the Netherlands. There is nothing in the request for a preliminary ruling to indicate that Mr Geelen had a fixed place of business outside the European Union or that he engaged in the export of services or supplied his services (those at issue the main proceedings) to taxable persons on a cross-border basis. In particular, the fact that the models perform outside the territory of the European Union (in the Philippines) does not mean that the case at issue concerns imports of services, since the supplier is Mr Geelen. ²¹

60Therefore, the services provided by Mr Geelen are not covered by Article 9(2)(e) and (f) of Directive 77/388 or by Article 56(1) and Article 57(1) of Directive 2006/112. Thus, the classification of those services as electronically supplied is irrelevant. As a result, there is no need to answer the second and third questions.

61It is true that the current version of Article 58(c) of Directive 2006/112 specifically governs all services supplied electronically to non-taxable persons, including those supplied within the territory of a single Member State, but that provision does not apply to the facts in the main proceeding. It is the legal provisions examined in the previous points of this Opinion that are relevant in the present case.

Conclusions

62In view of all of the foregoing, I propose that the Court answer the questions referred for a preliminary ruling by the Hoge Raad der Nederlanden (Supreme Court of the Netherlands, Netherlands) as follows:

Article 9(2)(c) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, as amended by Council Directive 2002/38/EC of 7 May 2002, and Article 52(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, in the version applicable until 31 December 2009, must be interpreted as meaning that services consisting in the organisation and provision of live interactive erotic webcam sessions do not constitute a supply of services relating to entertainment activities within the meaning of those provisions.

¹ Original language: Polish.

² OJ 1977 L 145, p. 1.

³ Council directive amending and amending temporarily Directive 77/388/EEC as regards the value added tax arrangements applicable to radio and television broadcasting services and certain electronically supplied services (OJ 2002 L 128, p. 41).

⁴ OJ 2006 L 347, p. 1.

⁵ The request for a preliminary ruling does not indicate clearly whether the ability to use these services is in some way technically limited to the territory of the Netherlands. It appears that this limitation may result from the need to make use of the internet service providers with which Mr Geelen has concluded an appropriate agreement.

⁶ Council Regulation of 17 October 2005 laying down implementing measures for Directive 77/388/EEC on the common system of value added tax (OJ 2005 L 288, p. 1).

⁷ See, to that effect, the judgment of 12 May 2005, RAL (Channel Islands) and Others (C‑452/03, EU:C:2005:289, paragraph 32).

⁸ Of course, there were radio and television services at that time. However, those were taxed at the place of establishment of the supplier, which generally coincided with the place from where the programme was broadcast. It is only since the 2002 amendment of Directive 77/388 (see footnote 3 of this Opinion) that the place of supply of such services, where supplied on a cross-border basis, has been considered to be the place of establishment or residence of the customer (see the eleventh indent of Article 9(2)(e) and Article 9(4) of Directive 77/388). However, radio and television services are limited to broadcasting the programme, reception being a matter for the customers, unlike services such as those at issue in the main proceedings where the supplier also makes it possible to receive content and even enables customers to actively participate.

⁹ Council Directive of 12 February 2008 amending Directive 2006/112/EC as regards the place of supply of services (OJ 2008 L 44, p. 11). Explanatory memorandum (exposé des motifs): COM(2003) 822 final.

¹⁰ Under that mechanism, it is the customer rather than the supplier who charges VAT at the rate applicable in the place of its establishment and subsequently either obtains the right to deduct input VAT if the purchased services are used for the purposes of its own taxable activities or pays it to the state treasury. In this case, it is assumed that since services purchased by taxable persons are usually used for the purposes of their business, the place of the customer’s establishment is at the same time the place of consumption of the service.

¹¹ This applies, for example, to services of a continuous nature as well as services supplied at a distance.

¹² See, for example, the judgment of 26 September 1996, Dudda (C‑327/94, EU:C:1996:355); that case concerned sound engineering services provided to concert organisers.

¹³ Council Directive of 5 December 2017 amending Directive 2006/112/EC and Directive 2009/132/EC as regards certain value added tax obligations for supplies of services and distance sales of goods (OJ 2017 L 348, p. 7).

¹⁴ That is, in the version in force from 1 January 2011, in accordance with Article 3 of Directive 2008/8.

¹⁵ My emphasis.

¹⁶ According to that provision, ‘the place of supply of services and ancillary services, relating to cultural, artistic, sporting, scientific, educational, entertainment or similar activities, such as fairs and exhibitions, including the supply of services of the organisers of such activities, supplied to a non-taxable person shall be the place where those activities actually take place’.

¹⁷ Judgment of 26 September 1996 (C‑327/94, EU:C:1996:355).

¹⁸ Via, as it appears, internet service providers.

¹⁹ See point 19 of this Opinion.

²⁰ In the main proceedings, it appears that the use of the services provided by Mr Geelen required the opening of an account with an internet service provider with which he had concluded an appropriate agreement, and Mr Geelen therefore had control over the territorial scope of his services. In general, however, services provided at a distance, and in particular over the internet, can be used without geographical restrictions. Accordingly, to conclude that the place of supply of such services, and consequently the place of their taxation, is the place where they are used by customers, could potentially lead to serious difficulties for suppliers due to the multiple places of taxation.

²¹ See point 43 of this Opinion.