CJEU judgment in the Xyrality case C-101/24 – Is the platform liable for VAT?

In its judgment of 9 October 2025 in case C-101/24 Xyrality, the Court of Justice of the European Union examined how, for VAT purposes, a digital platform acting as an intermediary in the sale of electronic services should be treated in the period before 2015, i.e. before the introduction of Article 9a of Implementing Regulation No. 282/2011.

At first glance, this seems like an outdated topic from a decade ago, but it is also relevant for current VAT settlements. The CJEU confirmed that even then there was a principle that required digital platforms to take greater responsibility for VAT settlements for transactions carried out on them.

What was the Xyrality case about?

The Xyrality case concerned a German mobile game developer whose products were sold through an app store operated by company X based in Ireland. The application could be downloaded for free. Players could also purchase paid upgrades (“in-app purchases”) that allowed faster progress in the game. The choice of upgrade was made in the Xyrality application, but the payment process took place in X’s store interface. Thus, it was X’s store that displayed purchase details, accepted payment and confirmed the transaction. X’s logo was visible at all stages, and Xyrality was not indicated as the service provider.

Only in the purchase confirmation email sent by the store did information appear that the transaction concerned a Xyrality game, together with information on the price (gross amount) and the amount of German VAT charged by Xyrality. The store deducted a 30% commission and transferred the remaining part to the developer.

Initially, Xyrality considered itself to be the service provider to users. Later, however, it corrected its returns, arguing that the actual recipient of its services was the Irish platform X, which, according to Article 28 of the VAT Directive, acts in its own name but on behalf of Xyrality.

However, the German tax authority considered that the store acted only as an intermediary, since during the purchase process there were messages stating that the sale was made “on behalf of a third party”, and X’s store was limited to accepting the payment. The court of first instance, however, agreed with the company, pointing out that the average user perceived X’s store as the seller. After the authority’s appeal, the case went to the referring court, which asked the CJEU three preliminary questions concerning:

1. whether Article 28 of the VAT Directive could apply if the actual service provider is disclosed only in the order confirmation,
2. how to determine the place of supply of services in the case of application of Article 28 of the VAT Directive, and
3. whether, when the purchase confirmation showed German VAT, the obligation to pay it arises on the basis of Article 203 of the VAT Directive[1].

Conditions for the application of Article 28 of the VAT Directive

According to Article 28 of the VAT Directive, “where a taxable person acting in his own name but on behalf of another person takes part in a supply of services, he shall be deemed to have received and supplied those services himself.”[2]. This provision creates the fiction of two supplies, one occurring between the actual service provider and the intermediary, and the other between the intermediary and the final customer.

It is therefore crucial to determine whether the intermediary actually acts “in his own name” towards the final customer, and not only transmits the payment or formally intermediates. In the Xyrality case, the Court left the assessment of this issue to the national court but reminded that the condition for the application of Article 28 of the VAT Directive is the existence of a mandate under which the intermediary performs the service on behalf of the principal.

The Court referred to the realities of electronic services, where the end customer often knows who actually provides the service. However, the CJEU clearly stated that the customer’s awareness of who the actual provider is is not sufficient to exclude the application of Article 28 of the VAT Directive. What is crucial in this respect are the intermediary’s powers, i.e. what actual role it plays in the transaction.

The Court also referred to Article 9a of Implementing Regulation No. 282/2011. Although these provisions came into force only after the period examined in the case, the CJEU held that they could serve as interpretative guidance, as they do not change the essence of Article 28 of the VAT Directive but only clarify its operation.

Xyrality in the light of earlier case law

The Xyrality judgment does not bring a revolution but has significant practical importance. It is the first case in which the CJEU explicitly confirmed, in the context of VAT, that even if the customer knows who actually provides the service, this does not exclude the application of Article 28 of the VAT Directive. What matters is the real powers and control over the transaction that the intermediary has.

The judgment fits into the line of case law initiated by the Fenix International case of 28 February 2023[3], in which the Court held that Article 9a of the Implementing Regulation only clarifies Article 28 of the VAT Directive, without introducing new rules. In other words, the text of the Directive itself is sufficient to apply the concept of a “deemed supplier”.

At the same time, the discussed judgment shows continuity with earlier cases concerning platform models, which, however, did not concern taxes directly. In the case of Uber Systems Spain SL of 20 December 2017[4], the Court held that the platform provides transport services (i.e. is not only an intermediary), because it decided on prices, the rules for providing services and access to customers, and thus controlled the key elements of the transaction. Differently in the case of Airbnb Ireland UC of 19 December 2019[5], where the CJEU stated that the platform remains an intermediary because it does not set prices, does not shape accommodation rules and does not bear responsibility towards guests.

In both cases, the common denominator was the assessment of actual control over the service. It is precisely this element that determines whether an entity acts “in its own name” and becomes a deemed supplier.

A similar reasoning can also be found in domestic case law, for example, the Voivodship Administrative Court in Kraków in its judgment of 20 November 2018[6] concerning the sale of tickets through an internet portal found that the operator does not provide admission services but an intermediation service, because it does not shape the conditions of sale and does not bear responsibility towards customers.

In this context, Xyrality is not so much surprising as it confirms that if a digital platform has sufficient influence over the services provided through it, it should bear the burden of VAT obligations.

The importance of Article 9a of the Implementing Regulation and the planned ViDA changes

The Xyrality judgment confirms that the mechanism from Article 28 of the VAT Directive does not need implementing provisions to create the fiction of a “deemed supplier” in the digital economy.

The planned introduction of Article 28a of the Directive under the ViDA[7] initiative will not be a revolution but only an extension of the existing model so that it also covers platforms intermediating in the provision of passenger transport and accommodation services by small service providers who often do not account for VAT and thus distort competition in these markets. In the light of the described judgment, however, such platforms can already be considered as suppliers of the services provided through them by other taxpayers.

Additional aspects: place of supply and Article 203 of the VAT Directive

The Court also referred to two important practical issues.

Firstly, the CJEU confirmed that if, under Article 28 of the VAT Directive, a fiction of two consecutive supplies arises, each of them should be analysed separately for the purpose of determining the place of taxation. This means that the classical rules concerning the place of supply of services fully apply here, and each stage of the “chain” should be considered independently.

Secondly, the Court clearly indicated that Article 203 of the VAT Directive does not apply in B2C relations, even if the purchase confirmation shows the amount of VAT. This provision is intended to protect the budget against the loss of revenue in situations where the buyer could deduct the tax shown on the invoice. In the case of consumers, such a risk does not exist, as they are not entitled to deduct VAT, and therefore there is no basis to charge the taxpayer with VAT erroneously shown in the purchase confirmation.

Summary

The Court’s judgment in Xyrality is an important signal for entities operating in platform models (application developers, marketplace operators or subscription platforms) that VAT settlement depends on the actual role in the transaction, and not only on the formal indication of the parties to the transaction.

For the digital business, this judgment is a reminder that, along with the development of the platform economy, responsibility for VAT is increasingly shifting towards digital platforms. Such entities should therefore analyse their models in the context of their VAT liability.

[1] Article 108 of the Polish VAT Act

[2] In the Polish VAT Act, the principle is set out in Article 8(2a).

[3] C-695/20

[4] C-434/15

[5] C-390/18

[6] I SA/Kr 1320/17

[7] The EU VAT in the Digital Age package