Case C-695/20 Fenix International Ltd v HMRC, Court of Justice of the European Union (Grand Chamber), EU:C:2023:127, Judgment of 28 February 2023
Fenix International Ltd operates the well-known www.OnlyFans.com website/online social media platform, which allows “Creators” to post content for “Fans” in return for payment. Fenix’s case is that it acts as agent in respect of transactions between Creators and Fans. Fenix charges Creators a 20% commission on all sums paid by Fans, and accounted for VAT in respect of that intermediary service for the accounting periods at issue. Thus, if a Fan pays 100 and Fenix charges the Creator commission of 20, Fenix accounted for VAT on the 20, rather than the 100.
HMRC assessed Fenix for VAT on the basis that Article 9a of Council Implementing Regulation (EU) No. 282/2011, which was directly applicable in the UK prior to IP Completion Day (23:00 GMT on 31 December 2020) and which remains applicable in the UK, deems Fenix to be liable for VAT on the 100. Fenix paid the assessments and has accounted to HMRC for VAT on that basis since HMRC’s decision. However, it appealed the assessments to the First-tier Tribunal (Tax Chamber) (“FTT”), arguing that the deeming provisions go beyond the power to “implement” the Principal VAT Directive, in this case Article 28 PVD, conferred on the Council by Article 397 PVD. Prior to IP Completion Day, any challenge to the validity of an EU Regulation could only be entertained by the CJEU; and a challenge before a national court had to be referred for a preliminary ruling under Article 267 of the Treaty on the Functioning of the European Union (“TFEU”).
On 15 December 2020, the FTT referred a question to the CJEU concerning the validity of Article 9a. On 22 December 2020, the order for reference was registered at the CJEU Registry. On IP Completion Day, the ability of UK courts and tribunals to make Article 267 references (relevantly) ended. The combined effect of the Withdrawal Agreement and the European Union (Withdrawal) Act 2018 is that the CJEU had jurisdiction to entertain the reference and that the FTT and UK are be bound by the CJEU’s answer. See “The Long Goodbye”, news item, 13 January 2021, if only for its prescient headline.
On 15 September 2022, Advocate General Ramos delivered an Opinion rejecting Fenix’s challenge (EU:C:2022:685).
On 28 February 2023, in its last judgment in an Article 267 reference from a UK tax tribunal (and possibly any other UK court), the CJEU (Grand Chamber) gave judgment. The CJEU followed the Advocate General’s Opinion and upheld the validity of Article 9a(1). The Court held-
Valentina Sloane KC, leading Max Schofield of 3PB, acted for Fenix.
Andrew Macnab acted for HMRC.
Read the CJEU’s judgment here.
Read the Advocate General’s Opinion here.
Read the FTT’s decision to refer here.