Recently the Advocate General (further: "AG") advised the Dutch Supreme Court on referring prejudicial questions to the European Court of Justice (further: "EcJ") on the VAT qualification of online webcam sessions and subsequently the place of supply of such sessions.


In the case at hand a Dutch company, supplies live and interactive erotic webcam sessions to its visitors which are located in the Netherlands. The webcam sessions are in fact performed by models, which are regarded as employees of the Dutch company, located in the Philippines. The models are supplied with all necessary hard- and software to perform the webcam sessions.


The Dutch tax authorities and the Dutch webcam company agreed that the underlying supply should be qualified for VAT purposes as a supply of an entertainment service and not as an electronic supplied service (ESS). The latter approach follows from the possibility for the visitor to interact live with the model (i.e. the human intervention aspect of these services).

The Dutch company took the position that the place of supply of the services supplied to the visitors of the online portal, should be set in the Philippines, i.e. the place where the performer is located, as a result of which no Dutch VAT was due.

The Dutch tax authorities however, took the position that the place of supply should be set in the Netherlands, where the "recipient" of the online performance is located and thus the entertainment service is "enjoyed".

Opinion Advocate General

First of all, the AG wonders if the underlying service qualifies for VAT purposes as an entertainment service, or if the underlying service should be qualified differently for VAT purposes (e.g. taxable under the main rule).

Furthermore, as B2C entertainment services are taxable in the jurisdiction where the entertainment actually takes place, the AG questions how to determine the place of supply of an online service which should be regarded as entertainment, whereby the actual provider of the entertainment and the recipient of the entertainment are both located in a different country.

Given the increase of web portals offering all sorts of online entertainment he underlying case could prove to be highly interesting if the Dutch Supreme Court, and perhaps at a later stage the EcJ, provide in further guidance on the scope of entertainment service and how to determine the place of supply of such a service in an online environment.