The Conseil d’Etat held that the counterpart received in exchange for the price paid for a “carnet” (booklet) of cinema tickets, or a card valid for multiple showings, comprised the right for the customer to benefit from the execution of the obligations resulting from the contract concluded with the cinema operator, irrespective of whether the customer took advantage of that right or not.
As a result, the amounts retained by the cinema operator in the event of the non-utilisation or expiry of such tickets must be viewed as the consideration for a supply of services subject to VAT, rather than as compensation falling outside the scope of VAT.
The taxable event arises when the customer, in attending the showings to which he is entitled, benefits from the agreed service, or, if this does not happen, at the time when the tickets or cards expire.
VAT is due when payment is received, provided that all of the elements relevant to the taxable event (in other words, the service), are known at the time of payment.
The Conseil d’Etat applied the principles recently established by the CJEU concerning the VAT treatment of unused, non-refundable airline tickets (see Air France-KLM and Hop!-Brit Air, 23 December 2015, joined cases C-250/14, C-289/14).