Tax rate decrease affirmed for techno events by Federal Finance Court
In a groundbreaking decision, the Federal Fiscal Court (BFH) of Germany has ruled that techno parties could potentially be taxed at a reduced VAT rate. This overturns an initial rejection by the tax court, making it possible for such events to be exempt from full VAT charges.
The ruling, announced on June 10th, applies specifically to concerts held in disused industrial areas and featuring both regional and internationally renowned DJs. The decision has only recently been made public.
According to the ruling, what matters most is whether the performances of the DJs form the main purpose of the event and give it its character. If music performances are the primary focus, entrance fees for techno and house concerts may be tax-exempt.
The concerts in question, which took place between 1 and 4 a.m., have been a hot topic of discussion due to their revenue structure. While ticket sales were a significant part of the income, drinks sold at the concerts generated more revenue.
One such event, held in an abandoned industrial area in Munich, featured the internationally renowned DJ Lelomann from Berlin, known for his involvement in the Berlin underground techno scene since the 1990s.
It's important to note that the highest German tax court decided that the regularity of an event and the value ratio of ticket and drink sales do not play a decisive role in determining the VAT exemption. This means that even infrequent events or those with a higher drink-to-ticket sales ratio could potentially qualify for the reduced VAT rate.
This ruling is a significant development for the techno and house music scene in Germany, potentially reducing the financial burden on organisers and making these events more accessible to a wider audience.
