National Exhibition Centre – European Court of Justice finds that a fee for arranging for credit card payments for tickets was not exempt from VAT

The owner of a British exhibition centre (“NEC”) sold tickets on behalf of third parties holding events at the centre. Where the customers paid by credit card, NEC increased the ticket prices by about 10%, and retained this amount as a booking fee.

The U.K. Upper Tribunal referred a question to the European Court of Justice respecting whether the card processing services of NEC were VAT-exempt payment services. Before answering, the Court questioned whether the NEC booking fees were consideration for a separate supply, stating that it previously had held “that the additional charges invoiced by a service provider to its customers, where the latter pay for those services by credit card…do not constitute consideration for a supply of services distinct and independent from the principal supply of services in respect of which that payment was made.” The Court did not explain how there could be a single supply and two suppliers (NEC supplying a card-processing service, and the third parties supplying tickets).

Turning to the question posed, the Court held that there was no exempt financial service because NEC did not debit or credit the customer’s account or otherwise provide a direct payment service but instead was merely involved in the exchange of information with its correspondent bank who, in turn, exchanged information with the card-issuer bank. This reasoning may suggest that it was crucial in Global Cash Access that Global actually issued its own “cheques” rather than merely facilitating payments by others.

Neal Armstrong. Summaries of HMRC v National Exhibition Centre Ltd., [2016] BVC 19 under ETA – s. 123(1) – supply, s. 123(1) – financial service – para. (a).