Explanation of the withdrawal of the pro forma appeal in cassation against the judgment of the Court of Appeal of The Hague of 20 April 2023, no. BK-22/00923.
The dispute concerns whether the party involved is liable for value-added tax (VAT) on the membership fees it receives from its members. In this context, the Court is examining whether there is a legal relationship between the party and its members, involving reciprocal performances, and whether the membership fees received by the party represent the true consideration for the services provided to the members, or in other words, whether there is a direct connection between the party’s activities and the membership fees.
The Court does not show any indication of adopting an incorrect legal view. Subsequently, it is partly based on an assessment of the evidence, which is reserved for the factual judge, to determine whether this requirement is met. In the present case, the Court finds that the requirement is not fulfilled. The author considers the Court’s implied judgment, that the answer depends on the extent to which members make use of the activities offered, to be incorrect, referring to a previous court ruling (HvJ EU 21 March 2002, C-174/00 – Kennemer Golf & Country Club, ECLI:EU:C:2002:200, point 42). The author also disagrees that the filling of the club magazine by the members themselves is relevant to the answer to the question at hand.
Considering all the circumstances and facts in their context, the Court ultimately concludes that the party appears to function more as a cost-sharing entity or intermediary among the members, rather than a body that performs association activities. The author argues that this conclusion cannot be deemed entirely incomprehensible. Under the given circumstances, it cannot be asserted that the membership fees directly reflect a service provided by the association to its members. The author suggests that the High Court (Hoge Raad) is likely to dismiss any potential appeal without providing detailed reasons (article 81 RO). As a result, the author does not expect a successful appeal to the High Court.
For clarification, the author points out that this does not imply that, in general, there cannot be cases where a non-profit association’s revenue from membership fees is subject to VAT, on account of services provided. On the contrary, in specific cases, the membership fees of an association may indeed be considered a direct compensation for services provided by the association. The essential factor in such a judicial assessment is the determination of facts and circumstances, along with the evaluation of the evidence by the factual judge. Thus, this evaluation primarily falls within the jurisdiction of the judge who presides over the factual aspects of the case.
Source: rijksoverheid.nl
