German financial court rules tax break for techno clubs
The Federal Fiscal Court (Bundesfinanzhof) made a historic decision on October 29 in Germany, ruling that techno is indeed a genre of music, extending the tax break that only German theatres, museums and concert venues received. It is music to the club-goers’ ears, as well as an enormous relief for financial managements after the revenue losses the music business had to face due to the ongoing COVID-19 pandemic.
It was disputable whether nightclub events should be considered concerts, thus be associated with culture, or parties which belong to the group of entertainment. The judgment implicates that techno and house club events are now classified as concerts as long as “the musical performances represent the actual purpose of the event from the perspective of an ‘average visitor.” However, this insinuates that only those German clubs are going to be entitled to the reduced tax rate which offer curated programmes. If they do meet the criteria, eligible clubs will only have to pay 7% VAT on entrance fees compared to the previously set standard rate of 19 %, which has been the case since 2009. As Lutz Leichsenring from Clubcommission Berlin told Resident Advisor:
“You still have to prove that people are coming because of the DJs and the artists […] So a shopping mall with a live DJ is probably unlikely to get the seven percent rate because people go there to shop. You have to have a strong argument.”
Prior to this recent ruling, a small step was taken forward when world-famous techno mecca, Berghain won its case against the city of Berlin in 2016. They sued the capital of Germany because the Berlin-Brandenburg fiscal court overrode their 2008 decision stating that techno events were equal to concerts. From now on, it is not only the legendary club that earned its well-deserved cultural recognition and the immense tax break, but each and every underground club. Since German venues and bars had no choice but to remain closed between November 2 and 30 because of the Coronavirus pandemic, the timing of this ruling cannot be better, having a break in the clouds during these challenging times.