On March 16, 2023, the state and a municipality reached a settlement in a case concerning whether the municipality was entitled to compensation for value-added tax (VAT) costs incurred in providing public access to a swimming pool for a fee. Such activity is exempt from VAT liability, according to Section 3-8(2) of the VAT Act. Therefore, instead of being eligible for VAT deduction, municipalities generally have the right to VAT compensation for incurred VAT costs.
However, according to Section 4(2)(4) of the VAT Compensation Act, a municipality is not entitled to compensation if it engages in economic activity that may compete with non-eligible businesses.
Municipal swimming facilities that charge for public swimming may be affected by this provision if the activity is considered economic or commercial in nature. (The municipality had already received compensation for the use of the swimming facility related to compulsory municipal swimming education.)
In this assessment, financial aspects are important, specifically the proportion between ticket revenue and the costs associated with the activity in question. Since other activities often take place in a municipal swimming facility, it is necessary to calculate the proportion of total costs attributed to the activity of public swimming for a fee.
Source: skatteetaten.no
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