Moulin Bruges?

One for the tabloids, this: on Thursday, the European Court of Justice will rule on a VAT appeal by the owner of a sex shop in Bruges.

The Erotic Center challenged the tax authority’s decision not to grant a “cubicle cinema” the 6% VAT rate provided for cinemas under Belgian VAT law, classifying it instead as an “automated recreation device” which is taxed at 21%. The Belgian court has asked whether this activity falls within the cultural exception provided for in the Sixth VAT Directive, which allows for such a reduced rate of VAT.

Timothy Kendal, a barrister at 2 Bedford Row, comments:

This case has enormous implications for the cost and provision of adult entertainment. Opinions are sharply divided as to just how automated the entertainment is. A finding that such a cubicle is not a cinema will cost the industry dear or force peep show proprietors to increase the size of their cubicles.

This is the how the case is listed in the Official Journal of the European Union:

Reference for a preliminary ruling from the Hof van beroep te Gent (Belgium) lodged on 8 January 2009

Erotic Center BVBA v Belgian State

(Case C-3/09)

(2009/C 82/20)

Language of the case: Dutch

Referring court: Hof van beroep te Gent

Parties to the main proceedings



Question referred:

Should a cubicle consisting of a lockable space where there is room for only one person and where this person can watch films on a television screen for payment, where this person personally starts the film projection by inserting a coin and has a choice of different films, and during the time paid for can continually modify his/her choice of projected films, be regarded as a “cinema” as referred to in the Sixth Council Directive No 77/388/EEC (1) of 17 May 1977, Annex H, Category 7 (subsequently: Annex Ill, No 7, of Council Directive 2006/112/EC C) of 28 November 2006)?

Update: The court has ruled that the payment made by a customer so as to be able to watch on his own one or more films, or extracts from films, in private cubicles cannot benefit from the reduced rate of VAT applicable to cinema admissions and other such cultural events.

In paragraph 17 of the judgment, the court states that the common feature of those services which can benefit from this reduced rate of VAT is that “they are available to the public on prior payment of an admission fee giving all those who pay it the right collectively to enjoy the cultural and entertainment services.” Such a concept does not apply to the private cubicles in question.     

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