A new hot (sic) topic is currently being debated in the world of indirect tax – what VAT should apply to peep shows? A legal update sent out by chambers 2 Bedford Row reveals that the owner of a sex shop in Bruges has appealed against a tax authority’s decision not to class his ‘cubicle cinema’ as eligible for the 6% VAT rate charged to cinemas under Belgian VAT law, ‘but instead to classify it as an "automated recreation device" (!!), and thus at a rate of 21%’.

Apparently the Belgian court has asked whether this activity falls within the ‘cultural exception’ which gives cinemas a lower rate of tax.

Bedford Row barrister Timothy Kendal assures us the case has huge importance: ‘This case has big ramifications for the cost and provision of adult entertainment. Opinions are sharply divided as to just how automated the entertainment is. A finding that such a cubicle is not a cinema will cost the industry dear or force peep show proprietors to increase the size of their cubicles.’ Obiter remains confident that the course of justice will not be perverted (pun not necessarily intended).