What does ‘standstill clause’ mean from a VAT perspective?

C-249/22. – GIS: Under the so-called “standstill clause,” member states can maintain VAT obligations for transactions that, according to the current directive, would not necessarily fall under VAT.

The subject of Case C-249/22 is the Austrian regulation that, before Austria’s EU accession, subjected public broadcasting services to VAT. This was financed through mandatory broadcasting fees paid in connection with owning a TV/radio set. Under the Austrian accession treaty, Austria could maintain this taxation.

The legal issue in question here is that the ORF (Austrian Broadcasting Corporation) public broadcasting service does not need to be subscribed to; rather, it is available to anyone who connects a decoder to their device (previously accessible through an analog antenna), and the broadcasting fee is paid simply for owning the device, even by those who do not watch public service programs at all. Hence, there is no direct connection between the public service broadcasting and the fee paid for owning the device, which is a general burden, as ORF provides services not to specific buyers but to “every device owner.” This raises doubt about whether public service broadcasting falls within the scope of VAT.

The European Court of Justice affirmed that the provisions of accession treaties of member states maintaining tax rules before accession (“standstill clauses”) are absolute. Thus, if a member state agreed upon accession to maintain VAT obligations for a specific service, there is no need to examine whether, under the current EU laws, the transaction would fall under VAT.