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Supreme Court of Denmark

S. 13(1)(18) of the Danish VAT Act 

Case no. 145/2008
Judgment 21 January 2011

Foreningen Roskilde Festival
The Danish Ministry of Taxation

S. 13(1)(18) of the Danish VAT Act

Each year, the association Foreningen Roskilde Festival hosts the Roskilde Festival, which is a VAT exempt event. The issue before the Supreme Court was whether the association was entitled to distribute the profit from the festival to support the establishment of the youth and community centre project in Roskilde (Gimle), "Ungdoms- og Kulturhuset Vandværket".

The establishment of the project "Ungdoms- og Kulturhuset Vandværket" in Roskilde (Gimle) involved, among other things, that Gimle would continue to be run as a regional music venue with increased audience capacity with the relocation of the original Gimle venue in Roskilde to the converted waterworks building. The project also involved the establishment of a night club and a café in a separate building, open to the public on a daily basis and offering a normal café selection. Using the profit from the 2003 Roskilde Festival to establish the said project would therefore involve, among other things, financial support to Gimle's ongoing music activities, café and bar etc. all subject to VAT.

The Supreme Court held that due to these business activities, the conditions for VAT exemption pursuant to S. 13(1)(18) of the Danish VAT Act had not been complied with, as the profit would not be used in full to support charitable or other non-profit purposes.

The Supreme Court therefore upheld that the fund Fonden Roskilde Festival could not use part of the VAT-exempt funds from the 2003 Roskilde Festival to establish the project "Ungdoms- og Kulturhuset Vandværket" in Roskilde. The direct use of the provisions of the 6th VAT Directive submitted by Foreningen Roskilde Festival could not lead to another conclusion.

The High Court had reached the same conclusion.

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