Court of Justice 9 July 2009, C-267/08 (SPÖ Landesorganisation Kärnten v Finanzamt Klagenfurt.)

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The Advocate-General opines that the 'external advertising' activities of the Carinthian provincial organisation of the Social Democratic Party of Austria (Sozialdemokratische Partei Österreichs) — comprising publicity, information provision, staging of party events, supply of advertising material to district organisations, and organisation of an annual ball — do not constitute 'economic activities' within the meaning of Article 4(1) and (2) of the Sixth VAT Directive (77/388/EEC), because the partial passing-on of expenses to subordinate party structures lacked the direct legal relationship and reciprocal performance required to constitute supply of services 'for consideration' under Article 2(1). The Advocate-General reasons that, absent a contractual obligation on subordinate groups to pay and given persistent losses far exceeding any revenue, the arrangement is analogous to the free provision of services condemned in Hong Kong Trade Development Council, Apple and Pear Development Council, and Tolsma, and that the fundamentally political — rather than commercial — character of party publicity precludes comparison with a commercial advertising agency. Public subsidies received under Austrian party-financing legislation do not constitute economic advantages capable of transforming the activity into an 'economic activity' for VAT purposes, and accordingly the provincial organisation cannot be regarded as a taxable person entitled to deduct input tax.AI