On October 26, 2017, the ECJ issued its decision in the case C-90/16 (The English Bridge Union).
Context: Reference for a preliminary ruling — Taxation — Value added tax (VAT) — Directive 2006/112/EC — Exemption for supplies of services closely linked to sport — Definition of ‘sport’ — Activity characterised by a physical element — Duplicate bridge
Article in the EU VAT Directive
Article 132(1)(m) of the EU VAT Directive 2006/112/EC.
Article 132(1)(m) (Exemption)
Article 132
1. Member States shall exempt the following transactions:
(m) the supply of certain services closely linked to sport or physical education by nonprofit-making organisations to persons taking part in sport or physical education;
Facts & Summary
The English Bridge Union (EBU) is a non-profit body responsible for regulating and developing duplicate bridge in England. Duplicate bridge is a card game that requires a degree of mental skill while the physical element of the game is considered negligible. The dispute in this case involves the EBU contending that the fees they receive from players entering organised duplicate bridge competitions should benefit from the exemptions allowed by the VAT Directive in respect of the supply of certain services closely linked to sport or physical education. The tax authorities refused to grant the exemption on the ground that the provisions pursuant to which the supply of certain services ‘closely linked to sport or physical education’ are exempt mean that a ‘sport’, within the meaning of that provision, must have a significant physical element.
The ECJ agreed with the tax authorities and held that the interpretation of the concept of ‘sport’ appearing in the Directive is limited to activities satisfying the ordinary meaning of that concept’, which are characterised by a not negligible physical element.
The Court went on to state that the fact that an activity promotes physical and mental health is not, of itself, a sufficient element for it to be concluded that that activity is covered by the concept of ‘sport’ within the meaning of the provision in question.
In providing its judgement the Court did comment that this interpretation is without prejudice to the question of whether an activity with a physical element that appears to be negligible may be covered by the concept of ‘cultural services’ within the meaning of the Directive, if the activity, in the light of the way in which it is practised, its history and the traditions to which it belongs, holds such a place in the social and cultural heritage of a country that it may be regarded as forming part of its culture.
The case highlights that activities with a physical element that appears to be negligible are not considered “sports” within the meaning of the VAT Directive but may fall in within the cultural services exemption.
Questions
What are the essential characteristics which an activity must exhibit in order for it to be a “sport” within the meaning of article 132(1)(m) of Council Directive 2006/112/EC of 28th November 2006 (“the Principal VAT Directive”)? In particular must an activity have a significant (or not insignificant) physical element which is material to its outcome or is it sufficient that it has a significant mental element which is material to its outcome?
Is duplicate contract bridge a “sport” within article 132(1)(m) of the Principal VAT Directive?
AG Opinion
(1) Among the characteristics an activity must exhibit in order for it to be a ‘sport’ within the meaning of Article 132(1)(m) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (the ‘VAT Directive’) a physical element is not necessary.
(2) Duplicate contract bridge as the activity at issue in the main proceedings is a ‘sport’ within the meaning of Article 132(1)(m) of the VAT Directive.
Decision
Article 132(1)(m) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that an activity such as duplicate bridge, which is characterised by a physical element that appears to be negligible, is not covered by the concept of ‘sport’ within the meaning of that provision.
Source:
Similar ECJ cases
Reference to the case in the EU Member States
Newsletters
