France: Unused, non-refundable tickets subject to VAT | KPMG | GLOBAL

France: Unused, non-refundable tickets are subject to VAT

France: Unused, non-refundable tickets subject to VAT

The high court in France held that non-refundable and unused multiple-entry movie theater cards and books of tickets are subject to value added tax (VAT).


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The Council of State (Conseil d’Etat), following an earlier judgment of the Court of Justice of the European Union (CJEU), concluded that non-refundable and unused multiple-entry movie theater cards and books of tickets are subject to VAT. 


The taxpayer (a movie theater operator), in addition to selling single tickets, offered customers multiple-entry cards and books of tickets for which they paid full price at the time of purchase. These cards and books had an expiration date after which any unused tickets would no longer be refundable. According to the taxpayer, the amount corresponding to the portion of the price of any tickets and entries not used by the expiration date were not to be characterized as consideration for a service, but rather as compensation for the loss suffered by the taxpayer (movie theatre operator) due to the customer’s default. Accordingly, it was asserted that the sums paid in this respect would not be subject to VAT. 

The Council of State, however, found that the movie theater operator placed customers in a position to attend movies, and that the sums paid when the tickets and entries were purchased were subject to VAT—whether or not the tickets and/or entries were used during their validity period. 

KPMG observation

Tax professionals with Fidal* have observed that the Council of State adopted a broad interpretation of the concept of “supply of services,” according to which, even if the customer did not actually benefit from the service rendered, the service is deemed to have been supplied as long as the customer was placed in a position to benefit from it. Thus, the mere fact that the customers did not actually avail themselves of the service (e.g., the projection of a movie) has no impact on the recognition of a supply of services. 


Read a June 2016 report [PDF 40 KB] prepared by Fidal* 


* Fidal is a French law firm that is independent from KPMG and its member firms.

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