UK: Regulation providing online platform is liable to pay VAT is valid

Advocate General of the Court of Justice of the European Union (CJEU)

Advocate General of the Court of Justice of the European Union (CJEU)

The Advocate General of the Court of Justice of the European Union (CJEU) today released an opinion finding that a UK value added tax (VAT) regulation providing that an online intermediary platform is, in principle, liable to pay VAT is valid.

The Advocate General found that the provision respects the essential general aims of the VAT Directive, is necessary or appropriate for its implementation and merely provides further detail without supplementing or amending it.

The case is: Fenix International (C-695/20)


As explained in a release [PDF 114 KB] from the CJEU:

  • The taxpayer, which is registered for VAT purposes in the United Kingdom, operates an online platform that is offered to “users” from around the world, who are divided into “creators” and “fans.” Creators post content such as photographs and videos to their respective profiles and can also stream live videos to their fans or send private messages to them. Fans can access that content by making payments, while also having the possibility to pay tips or donations to the creators without consideration.
  • The taxpayer is responsible for collecting and distributing the payments made by fans, charging creators an amount of 20% of the sums paid by their fans by way of a deduction. In respect of the payments involved in this case, the taxpayer charged and accounted for VAT on a tax base constituted by the 20% deduction.
  • Taking the view that the taxpayer was required to pay VAT on the basis not of the 20% deduction but of all the sums paid by fans, the UK tax authority in April 2020 sent the taxpayer assessments for the VAT due.
  • The taxpayer filed an appeal before the First-tier Tribunal (Tax Chamber) (United Kingdom) against the decision of the tax authorities, disputing the validity of the legal basis for the assessments at issue. The tribunal asked the CJEU whether the provision of the regulation implementing that directive which provides that an online intermediary linking service providers with their customers is, in principle, liable to pay VAT is valid in the light of the concept of “implementing power” under the VAT Directive. 

Advocate General’s opinion

In the opinion delivered today, the Advocate General observed that an implementing act must comply with the essential general aims of the basic legislative act. Moreover, an implementing act must be necessary or appropriate for the implementation of the basic legislative act in that it provides further detail in relation to its content without supplementing or amending it, even as to its non-essential elements.

In that regard, the Advocate General noted that the relevant provision of the VAT Directive does not contain any restrictions as to its scope or its extent. Accordingly, no category of services is excluded from the substantive scope of that provision. It follows that the provision of the implementing regulation at issue, which deals with the specific issue of when an intermediary is liable to pay VAT where electronically supplied services are supplied through an online platform, respects the essential general aims pursued by the VAT Directive.

The Advocate General also found that the provision in question had a purely technical nature in that it clarified the situation of commission agents operating in the area of e-commerce, by laying down criteria to identify the supplier of services in order to determine who is liable to pay VAT. Without such clarification, the problem of the double taxation of cross-border transactions can arise or, conversely, that of non-taxation in a chain that involves an online platform. The provision thus appeared necessary or appropriate for the implementation of the relevant provision of the VAT Directive.

The Advocate General also pointed out that the concept of a “taxable person acting in his own name but on behalf of another person,” in relation to which the provision in question of the implementing regulation seeks to provide further detail by laying down a presumption, which in principle is rebuttable, that an online intermediary is liable to pay VAT, appears in the VAT Directive itself. Thus, that provision cannot be regarded as amending or supplementing that directive.

As to the taxpayer’s argument that the provision transfers the liability for payment of VAT to the intermediary, in breach of the VAT Directive, the Advocate General observed that it is precisely that directive which effected such a transfer, the detailed rules of which are merely determined by the provision in question as regards services supplied electronically. Moreover, according to the Advocate General, by providing for situations in which the abovementioned presumption cannot be rebutted in any event, the provision takes account of the economic and commercial realities of a given transaction rather than just the contractual relationships relating to it. In addition, in the context of a chain of transactions relating to supplies of services in the area of e-commerce, the commission agent is, in principle, an opaque intermediary. The mere fact that, in a particular, specific situation, the agency is manifest and the identity of the principal is known does not appear to be sufficient to consider the provision, as such, to be invalid.

KPMG observation

The Advocate General’s opinion is not binding on the CJEU. The role of the Advocates General is to propose to the court, a legal solution to the cases for which they are responsible. The CJEU judges will now begin their deliberations in this case with a judgment to be given at a later date.


The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.