- A municipality in Germany operates a spa and imposes a spa tax on visitors staying in the municipality.
- The tax is used to fund the maintenance and renovation of the spa facilities, which are freely accessible to everyone.
- The taxpayer treated the spa tax as subject to VAT, but a tax audit was undertaken, and the tax authority concluded that there was no business activity.
- The Court ruled that the payment received (the spa tax) is not direct consideration for the provision of the spa facilities, as there is no legal relationship in which there is reciprocal performance between the municipality and visitors.
- Therefore, the services do not constitute a supply of services for a consideration. The Court did not consider the distortion of competition point in Article 13(1) due to its conclusion.
Source KPMG
See also
- Summary of C-344/22 (Gemeinde A)– Access for free to spa facilities is not a taxable transaction if remuneration is a tourist tax
- ECJ C-344/22 (Gemeinde A)- Judgment – Access for free to spa facilities is not a taxable transaction if remuneration is a tourist tax
- Join the Linkedin Group on ECJ VAT Cases, click HERE
- For an overview of ECJ cases per article of the EU VAT Directive, click HERE
