TC09596 - [2025] UKFTT 00895 (TC)

By way of example, the case of Tolsma concerned a busker who solicited donations from passers-by. The Dutch authorities assessed for output tax on these payments since a supply had been made to the passers-by. The sums he received were held not to be taxable. The ECJ accepted Mr Tolsma’s appeal and ruled that the playing of music on the public highway, for which no payment was stipulated, did not constitute a supply of services effected for consideration. At [14], the CJEU explained this as meaning:

“…the remuneration received by the provider of the service constituting the value actually given in return for the service supplied to the recipient.”

At [16] to [19], CJEU said this:

“16.

If a musician who performs on the public highway receives donations from passers-by, those receipts cannot be regarded as the consideration for a service supplied to them.

17.

First, there is no agreement between the parties, since the passers-by voluntarily make a donation, whose amount they determine as they wish. Second, there is no necessary link between the musical service and the payments to which it gives rise. The passers-by do not request music to be played for them; moreover, they pay sums which depend not on the musical service but on subjective motives which may bring feelings of sympathy into play. Indeed some persons place money, sometimes a considerable sum, in the musician’s collecting tin without lingering, whereas others listen to the music for some time without making any donation at all.

18.

In addition, contrary to the arguments of the German and Netherlands governments, the fact that the musician plays in public with a view to collecting money and actually receives certain sums in so doing is of no relevance for the purpose of determining whether the activity in question constitutes a supply of services for consideration within the meaning of the Sixth Directive.

19.

That interpretation is not affected by the fact that a musician such as Mr Tolsma solicits money and can in fact expect to receive money by playing music on the public highway. The payments are entirely voluntary and uncertain and the amount is practically impossible to determine.”

The ECJ ruled in favour of Mr Tolsma because there was no agreement between the parties, and there was also no necessary link between the musical service and the payments to which it gave rise. Mr Tolsma played whether the passers-by paid him, or not, and he had not entered into a formal agreement with them for the provision of his service. Put another way, the behaviour of the ‘supplier’ is important. If s/he will continue to make the supplies regardless of whether money is received, then the money received will not amount to consideration.