On 11 February 2026, the EU General Court ruled in Case T-643/24 that rights holders supply a taxable service when their protected works are communicated to the public without a licence. VAT applies to the whole amount due, including the part above the normal licence fee.
The case
A Romanian company used protected music without first obtaining a licence from Credidam, a collective management organisation. Under Romanian rules, the remuneration in that situation is three times the normal amount. Credidam claimed that amount with VAT on top. The company argued that no VAT was due.
The ruling
- The rights holders supply a service for consideration, even though they cannot oppose the communication and their remuneration follows from national law.
- VAT applies to the total remuneration. The increase is a direct consequence of the unlicensed use, so the price for VAT purposes is the tripled amount.
The General Court built on earlier case law. In Apcoa Parking Danmark (C-90/20), the costs of checking illegal parking were subject to VAT, although national law classified them as penalties. In Fluvius Antwerpen (C-677/21), the same applied to compensation for electricity obtained illegally.
Why it matters
Calling an amount a penalty or a surcharge does not take it outside VAT. What counts is the direct link between the supply and the payment. Businesses that charge a higher fee for unlicensed or irregular use should check whether VAT belongs on the full amount.
mr. J. el Khalfioui LL.M.