SAWP Case (C-37/16) VAT taxation of reprographic fees

This ruling harmonized the principles of VAT taxation of reprographic fees in all EU Member States. The CJEU issued a judgment on the possibility of recognizing reprographic fees and charges on blank media (these are fees collected by collective management organizations from manufacturers and importers of copiers, flash drives etc. as a kind of compensation for “losses” incurred by authors and other authorized persons in connection with the possibility of using these devices for copying and other reproduction of works for personal needs).

For years, tax authorities considered these fees to be payment for rendered services (to put it simply these were supposed to be two services: by the author for the benefit of a collective management organization and by the collective management organization for the befit of an  importer / manufacturer of devices). The first judgments of the Supreme Administrative Court accepted the position of the authorities. It was only the Supreme Administrative Court’s judgment in the MDDP case of December 2015 that changed this direction. However, the authorities kept on fighting bringing two cases to the Supreme Administrative Court; The Supreme Administrative Court applied for a resolution in this matter, though instead of passing a resolution the enlarged panel referred a question to the CJEU. The judgment of the CJEU unequivocally resolves this issue, fully confirming the position presented in the case by MDDP.

This is the first judgment of the CJEU on VAT taxation of such fees – it is of great importance for the practice in all EU countries, and this practice has been varied so far.