On December 12, 2020, the ECJ issued his judgment in case C-488/18 (Golfclub Schloss Igling). The main issue raised by this case is if the VAT exemptions for sport, can be considered to be sufficiently precise and unconditional and, therefore, to have direct effect.
Article in the EU VAT Directive
Exemption – Article 132(1)(m) of the EU VAT Directive 2006/112/EC
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
Golfclub Schloss Iglin imanages a golf course and its associated facilities, which it leases to Golfplatz-Y-Betriebs-GmbH (Golfplatz). According to Article 13(3) of the association’s statutes, in the event of voluntary or forced dissolution, its assets are transferred to a person or institution designated by the general meeting.
Golfplatz was acquired by Golfclub for EUR 380 000. In order to finance this operation, Golfclub has contracted loans from its members with an annual interest rate of 4% and repaid at a rate of 5% per year.
During the same year, Golfclub collected revenue from the use of the golf course, the rental of golf balls, the hiring of caddies, the sale of golf clubs and the organisation and holding of golf tournaments and events.
The German tax office refuses to exempt these activities from VAT on the ground that only participation fees are exempted and that, even for the organisation and holding of golf tournaments, this exemption may not be applied, since Golfclub cannot qualify as a charitable organisation. Indeed, its articles of association did not provide sufficiently precise rules as regards the statutory allocation of its assets in the event of a dissolution and the acquisition of Golfplatz demonstrates that it does not exclusively pursue a non-profit purpose.
Questions
Does Article 132(1)(m) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, 1 under which Member States are to exempt ‘the supply of certain services closely linked to sport or physical education by non-profit-making organisations to persons taking part in sport or physical education’, have direct effect, with the result that, in the absence of transposition, that provision may be relied on directly by non-profit-making organisations?
If the first question is answered in the affirmative: Is ‘non-profit-making organisation’ 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
a concept that must be interpreted under EU law autonomously, or
are the Member States authorised to make the existence of such an organisation subject to conditions such as Paragraph 52, in conjunction with Paragraph 55, of the Abgabenordnung (German General Tax Code) (or Paragraph 51 et seq. of the General Tax Code in their entirety)?
If it is a concept that must be interpreted under EU law autonomously: Must a non-profit-making organisation 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 have rules that apply in the event that the organisation is dissolved, under which it has to transfer its existing assets to another non-profit-making organisation in order to promote sport and physical education?
AG Opinion
Article 132(1)(m) of Council Directive 2006/112/EC on the common system of value added tax, exempting ‘the supply of certain services closely linked to the practice of sport or physical education, provided by non-profit organisations to persons practicing sport or physical education’, is to be interpreted as not being of direct effect, so that provision may not be relied upon directly before the national courts by individuals, unless the Member State concerned has exceeded the scope of the discretion conferred on it by that provision of the directive.
Decision (Unofficial translation – not yet published in English)
1) 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 it does not does not have direct effect, so that, although the legislation of a Member State which transposes this provision exempts from value added tax only a limited number of supplies of services closely linked to the practice of sport or physical education, said provision cannot be directly invoked before national courts, by a non-profit organization, in order to obtain exemption from other services closely linked to the practice of sport or the physical education that this body provides to people who practice these activities and that this legislation does not exempt.
2) Article 132 (1) (m) of Directive 2006/112 must be interpreted as meaning that the concept of ‘non-profit organization’, within the meaning of that provision, constitutes a concept independent of law Union, which requires that, in the event of the dissolution of such a body, it may not distribute to its members the profits it has made which exceed the capital shares released by them as well as the market value of contributions in kind paid by them.
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