Finmeccanica Global Services Spa v HM Revenue and Customs

For VAT place-of-supply purposes, the specific Article 9(2) categories are mutually exclusive, but potentially overlapping characteristics may be compared to identify the closest connection or best fit. The advertising-services category remains relevant even where its destination rule cannot apply because supplier and customer are established in the same state. A fair or exhibition may be a similar activity without a cultural, artistic or educational theme. Promotion alone does not make services advertising, and a direct link with final consumers is unnecessary. Services bespoke to a specific event at an identifiable location are classified by their essential purpose. Here, the supplies related principally to an exhibition event, so the place of supply was England and no VAT refund was due.

Finmeccanica Global Services Spa, an Italian group service company, organised a substantial private enclosure for the Farnborough air show. It purchased UK goods and services for the enclosure and invoiced Italian VAT to other Italian group companies. It sought refunds of UK VAT under the Refund Directive.

The First-tier Tribunal treated the supplies as outside the events category and within the default place-of-supply rule. The Upper Tribunal, in [2015] UKUT 0378 (TCC), held that the supplies fell within the events category, with the result that no refund was payable. The central issue was whether the supplies were advertising services, services relating to an event or exhibition, or services governed by the default rule.

1. Disposition. Patten LJ gave the leading judgment. Davis LJ agreed with it, and Beatson LJ agreed with both judgments. The appeal was dismissed.
2. The focus was on the services supplied in relation to the Finmeccanica enclosure, not on the Farnborough air show as a whole. The specific categories in Article 9(2) of the Sixth Directive are mutually exclusive, but a supply may have characteristics relevant to more than one category. The court must compare the categories and select the one with which the supply has the closest connection or which provides the best fit. If no specific category applies, the Article 9(1) default rule governs.
3. The scope of advertising services remained relevant even though the advertising destination rule could not apply because FGS and the recipient companies were established in the same country. Advertising involves conveying a message about the existence or qualities of products or services with a view to increasing sales. Promotional activities qualify only where they form part of a recognisable advertising campaign and contribute to conveying its message. A promotional purpose alone is insufficient.
4. Following Dudda, Gillan Beach and Inter-Mark, the events category includes fairs and exhibitions as similar activities. Such activities need not have a cultural, artistic, scientific or educational theme. The presence of final consumers, paying admission or a direct link with end sales is not essential. Services may be ancillary to a specific event even where supplied to exhibitors rather than the organiser, provided the event and its physical location are identifiable.
5. The supplies were bespoke services designed to create and operate a particular exhibition enclosure at Farnborough. Although promotional functions formed part of the enclosure’s purpose, treating that general purpose as decisive would ignore the specific event that the services enabled. The supplies therefore fell within Article 9(2)(c), rather than Article 9(1), and no UK VAT refund was payable.

• Court of Appeal (Civil Division): Dismissed the appeal and upheld the conclusion that the supplies fell within the events category: [2016] EWCA Civ 1105.
• Upper Tribunal (Tax and Chancery Chamber): Rose J held that the supplies fell within Article 9(2)(c), so no VAT refund was payable: [2015] UKUT 0378 (TCC).
• First-tier Tribunal: Held that the supplies did not fall within the events category and were governed by the default rule.