Adult theatres with "private cubicles" cannot benefit from a lower sales tax rate usually reserved for cinemas, the European Union's highest court said in a dispute triggered by a Belgian sex shop.
While cinemas give people "the right collectively to enjoy the cultural and entertainment services," the EU list of such places exempt from higher taxes "does not cover the payment made by a customer so as to be able to watch on his own one or more films, or extracts from films, in private cubicles," the European Court of Justice in Luxembourg ruled today.
Erotic Centre, a Bruges sex shop, argued its coin-operated cabins qualified for the reduced 6 per cent rate of value added tax instead of the standard rate of 21 per cent.
A Belgian court sought guidance on whether establishments fell into the list of services, such as theatres, concerts, and cinemas that can claim lower VAT under EU law. VAT is a consumption levy charged on goods and services.
Today's ruling contradicts the decision by The Netherland's Supreme Court in 2008 to allow adult theatres to apply for lower VAT rates, because the definition for music and theatre performances should "be interpreted broadly."
Bloomberg