European Union: A-G Rantos opines that Article 9a of the VAT Implementing Regulation is valid

Platforms intermediating e-commerce services therefore held to account for VAT on supplies over their platform

In brief

On 15 September 2022, Advocate General ("AG") Rantos delivered his Opinion in the Fenix International C-695/20 case of the European Court of Justice (“ECJ”) before the Grand Chamber. As anticipated, the AG opines that Article 9a VAT Implementation Regulation (“Article 9a”) is adopted correctly and that the provision is valid. While from a legal-point of view the AG could in our view have concluded differently, the outcome is not unexpected given the financial implications for the EU Member States involving billions of Euros. AG Rantos does urge the ECJ, should they draw another conclusion, to limit their judgment in time (i.e. only prospective effect) because of aforementioned financial implications. Could this perhaps imply that the AG fears the ECJ might take a different view after all? We will have to await the ECJ’s final judgment to tell. One thing is certain, this will be a judgment eagerly awaited for by many.



Fenix International Limited ("Fenix") operates a social media website known as Only Fans (the “Platform"). On the Platform, Creators can create a profile and post content such as photos and videos. Creators can also livestream videos and send private messages to Fans who subscribe to them. The Creators determine the monthly subscription fee for their profile, although Fenix sets the minimum amount for the subscription. The Platform is available to Creators and Fans across the globe, including users in the UK.

In short, the UK tax authorities (HM Revenue and Customs, "HMRC") are of the view that Fenix is deemed to act in its own name with respect to the services rendered by Creators to Fans because of the application of Article 9a. The article aims to clarify the scope of Article 28 VAT Directive (“Article 28”) and contains a deemed reseller provision that shifts the liability to collect VAT from a supplier of electronically supplied services to an intermediary in the supply chain. Hence, where Article 9a applies, the intermediary (Fenix) is deemed to have both received (from the supplier, the Creator) and supplied (to the customer, the Fan) the relevant services, becoming the supplier towards the final customer. However, Fenix did not collect any VAT on the subscription fees of the Creators and only collected and remitted VAT on its own service fee for the use of the Platform.

The Legal Dispute

The dispute revolves around the legality of Article 9a. More specifically, the question is whether the Council correctly adopted Article 9a through the VAT Implementing Regulation, a type of legislative act.

For background, the EU legislator can adopt its policy in principle through the following legislative acts:

  • Basic legislative acts, containing the essential elements of an area are reserved for the legislative act and cannot be subject to a delegation of power.1
  • Delegated acts, which are non-legislative acts of general application supplementing or amending certain non-essential elements of a legislative act. The EU legislator can delegate this power to the Commission.2
  • Implementing acts, which are non-legislative acts laying down conditions for the uniform implementation of legally binding Union acts. The EU legislator may confer this power to the Commission or, in duly justified specific cases, the Council.3

Settled case law determines the limits of the implementing power of the Commission by reference to, amongst others, the essential general aims of the legislative act in question.4The EU legislator is authorized to adopt measures that are necessary or appropriate for the implementation of an act, provided they are not contrary to it.5 An implementing regulation may therefore only lay down uniform conditions for implementing the basic legislative act and cannot be used to impose new obligations upon taxpayers or to broaden the scope of existing obligations (i.e. it may not amend or supplement the act itself).

With this in mind: the reason why Article 9a refers to Article 28 is because a provision in the Implementing Regulation needs to have its legal basis in the VAT Directive. The only provision in the VAT Directive that could serve as a basis for Article 9a is the 'reseller- or commissionaire fiction' of Article 28.6

Position of Parties

According to Fenix, Article 9a amends the application of Article 28 in two fundamental ways:

  1. First, Article 9a introduces the presumption that an intermediary platform is acting in its own name but on behalf of the underlying supplier. In other words, it is deemed that the platform has purchased and subsequently provided the services itself, as a result of which the liability to collect and remit VAT is shifted from the supplier to the platform. This presumption is only rebuttable in case very specific conditions are met.
  2. Second, Article 9a prevents the presumption from being rebutted, even when the platform operates as a disclosed agent, when the platform does either one of the following things:
    • Setting the general terms and conditions of the supply carried out by the Content Creator (including terms and conditions for the use of the website);
    • Authorizing the charge to the customer; or
    • Authorizing the delivery of the services to the customer.

According to HMRC, Article 9a does not supplement or amend the scope of Article 28 VAT Directive as it merely clarifies the autonomous meaning of this provision.

Opinion of A-G Rantos

In his Opinion, AG Rantos concludes that the aim of Article 28 is to determine under which circumstances an intermediary is taking part in a supply without any restrictions as to its scope or extent. Because Article 28 is “couched in general terms”, Article 9a respects the essential general aims pursued by Article 28.

The AG is further of the opinion that Article 9a is of a mere technical nature as it establishes criteria to determine who is liable for VAT. In absence of such clarification, issues around double-taxation and non-taxation are likely to arise. Accordingly, the AG considers that Article 9a is necessary and appropriate for the implementation of Article 28 by the Member States.

The AG also points out that Article 9a does not supplement or amend Article 28. In this regard, he considers that Article 9a only clarifies the application of Article 28 in a specific situation: transactions involving electronically supplied services. This would be necessary as Article 28 does not define when a person acts as such.

While the AG acknowledges that the application of Article 9a is difficult to rebut, he also states that this is exactly what the provision is intended to do. Article 9a takes into account the commercial and economic reality of the transactions in their specific context, the e-commerce sector, instead of just looking at the underlying legal arrangements.

In these circumstances, the AG concludes that the Council did not go beyond its implementing power and advises the ECJ to declare Article 9a valid.

Interestingly, AG Rantos also comments on the potential scenario that the ECJ does not follow his conclusion and the economic impact thereof. As it appears, if Article 9a were to be declared invalid, it is expected that the total VAT to be refunded for the UK only could reach to an amount of approximately EUR 3,2 billion. For this reason, the AG urges the ECJ to limit in time the effects of its judgement, should the ECJ nevertheless decide that Article 9a is invalid.

Our observations

As anticipated, AG Rantos concluded that the European Council adopted Article 9a correctly and that it remains valid as a result. During the hearing of this case at the ECJ on May 3rd, 2022, the AG’s line of questioning seemed to allude already to the outcome at hand.

During this hearing, questions posed by the judges of the Grand Chamber of the ECJ seemed however slightly more skeptical towards the validity of Article 9a. Nevertheless, it is clear that declaring Article 9a invalid without any limitation in time will have severe financial implications for the EU Member States. AG Rantos' plea for a time limit on the other hand seems to imply that despite his reasoning, the ECJ may in this case nevertheless rule differently. We will have to await the ECJ’s final judgment to tell.


1 The 'ordinary' legislative procedure. Article 290(1) TFEU. 

2 Delegated acts allow the EU legislator to adopt policy and objectives through a less extensive legislative procedure. Article 290(2) TFEU. 

3 Implementing acts provide rules and principles for the Member States to ensure that (legally binding) EU law is implemented in a uniform way. Article 291(2) TFEU. 

4 Meaning that the VAT Directive is a 'duly justified specific case' in which the Council may lay down uniform conditions for implementing legally binding Union acts as stipulated in Article 291(2) TFEU. The case law referred to are e.g. ECJ 15 October 2014, Parliament v Commission (C‑65/13, EU:C:2014:2289, paragraph 44 and the case-law cited), and of 9 June 2016, Pesce and Others (C‑78/16 and C‑79/16, EU:C:2016:428, paragraph 46). 

4 ECJ 15 October 2014, C-65/13 (European Parliament vs. European Commission). 

5 By way of comparison: the EU's 2021 deemed supplier rule for goods has its legal basis in the VAT Directive: art. 14a VAT Directive. 

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