According to Article 53 of the EU VAT Directive the place of supply of services relating to admissions with regard to cultural, artistic, sporting, scientific, teaching, entertainment and similar events is the place where these events actually take place. This rule is transposed into German VAT legislation (§ 3a Abs. 3 Nr. 5 UStG).

In addition, a German VAT implementing decree stated the requirement – for events in the areas of teaching and science – that the event must generally be accessible to the public.

In June 2021, the German government has issued a letter stating that the criterion of public accessibility is considered to be no longer relevant for determining the place of supply on the basis of § 3a Abs. 3 Nr. 5 UStG. In addition, going forward the physical presence of the recipient of the supply at the event will be required to fall within the scope of § 3a Abs. 3 Nr. 5 UStG (online participation, therefore, is removed from the scope of application of § 3a Abs. 3 Nr. 5 UStG). Since the outbreak of the corona pandemic, online events have become very popular. Whether the place of supply for these services can also be determined by where the events actually take place was, due to the lack of a physical venue, previously unclear.

Initially the rules intended to apply with immediate effect. However, in August 2021, a period of grace is introduced following which for services provided prior to 1 January 2022 the place of service may still be determined based on the VAT regulations in force until 8 June 2021.

Following a discussion with the German VAT authorities, the CJEU has ruled that a taxable person is allowed to deduct VAT incurred on all expenses for adjustment works to a public road, property of the municipality. Without these works the exploitation by that taxable person of the limestone quarry would not be possible. The main use of this road is for accessibility of the quarry. Despite the works being transferred for free to the municipality and the road remaining open for the public, these adjustment works are still directly linked to the VAT activities of the company. Therefore, it is allowed VAT deduction for the works that are limited to what is necessary to ensure the operation of the limestone quarry.

The transfer of these works free of charge to the municipality does not constitute a transaction which must be treated as a supply of goods made for consideration (deemed supply). The actual end-use of this road should be taken into consideration. And that is mainly the VAT activity of the company, so the transfer free of charge does not give rise to a situation of untaxed final consumption.

CJEU, C-528/19, Mitteldeutsche Hartstein-Industrie AG, 16 September 2020