On December 19, 2013, the ECJ issued its decision in the case C-495/12 (Bridport and West Dorset Golf Club).
Context: Taxation – VAT – Directive 2006/112/EC – Exemptions – Article 132(1)(m) – Supply of services closely linked to sport – Access to a golf course – Payment of golf club access charge (‘green fee’) by visiting non-members – Exclusion from the exemption – Article 133(d) – Article 134(b) – Additional income
Article in the EU VAT Directive
Articles 133(d) , 134(b) of the EU VAT Directive 2006/112/EC.
Article 133
Member States may make the granting to bodies other than those governed by public law of each exemption provided for in points (b), (g), (h), (i), (l), (m) and (n) of Article 132(1) subject in each individual case to one or more of the following conditions:
(a) the bodies in question must not systematically aim to make a profit, and any surpluses nevertheless arising must not be distributed, but must be assigned to the continuance or improvement of the services supplied;
(b) those bodies must be managed and administered on an essentially voluntary basis by persons who have no direct or indirect interest, either themselves or through intermediaries, in the results of the activities concerned;
(c) those bodies must charge prices which are approved by the public authorities or which do not exceed such approved prices or, in respect of those services not subject to approval, prices lower than those charged for similar services by commercial enterprises subject to VAT;
(d) the exemptions must not be likely to cause distortion of competition to the disadvantage of commercial enterprises subject to VAT.
Article 134
The supply of goods or services shall not be granted exemption, as provided for in points (b), (g), (h), (i), (l), (m) and (n) of Article 132(1), in the following cases:
(a) where the supply is not essential to the transactions exempted;
(b) where the basic purpose of the supply is to obtain additional income for the body in question through transactions which are in direct competition with those of commercial enterprises subject to VAT.
Facts
- Bridport is a private golf club, the objects of which include the maintenance and management of the golf club for the use and accommodation of its members and visitors, as well as, inter alia, the running of a golf school and the provision of golf instructors and equipment.
- In September 2009, approximately half of Bridport’s 737 members were full members with access to the club’s course allowing them to play at any time, seven days per week, for a standard annual fee of GBP 657.20. It was also possible for visiting non-members to play on the course on payment of an access charge (‘green fee’) of GBP 32 to GBP 38 per round, or a higher rate per day. The prices of the annual subscriptions and the green fees were set by Bridport taking into account the prices charged by neighbouring non-profit-making clubs and also by one commercial golf course operator.
- For the financial year ending on 30 September 2009, the income from green fees represented 18.7% of Bridport’s income and annual subscriptions from members 56.4%, the balance coming largely from the operation of the bar.
- Having, for several years, accounted for and paid to the Commissioners VAT on its green fee income, Bridport brought a claim, relying on Case C‑253/07 Canterbury Hockey Club and Canterbury Ladies Hockey Club [2008] ECR I‑7821, for reimbursement of the amount of VAT overpaid, which it calculated to be GBP 140 359.16. Following the Commissioners’ rejection of that claim, Bridport appealed against that rejection to the First-tier Tribunal (Tax Chamber).
- The First-tier Tribunal (Tax Chamber) allowed the appeal, holding that there was no difference in the right to play golf on Bridport’s course whether that right was granted to members of the club or to non-members paying the green fees and that those fees were exempt from VAT under Directive 2006/112. The Commissioners appealed against that judgment to the Upper Tribunal (Tax and Chancery Chamber).
- According to the Upper Tribunal (Tax and Chancery Chamber), it is not in dispute that Bridport is a non-profit-making organisation as referred to in Article 132(1)(m) of Directive 2006/112. It is also not in dispute that the supply consisting of granting visiting non-members the right to use the golf course is closely linked to sport, that it is provided to persons taking part in sport and that it is essential to the transactions exempted, as referred to in Article 134(a).
Questions
1. When applying the mandatory provisions of Article 134 [of Directive 2006/112] to the provisions of Article 132(l)(m) [of that directive] in the circumstances of a body accepted to be a non-profit-making organisation making supplies of the right to play golf, what supplies, if any, constitute “the transactions exempted”?
2. Is it legitimate to restrict exemption under Article 132(l)(m) [of Directive 2006/112] by reference to whether the services of granting a right to play golf are made to a member of the non-profit-making organisation?
3. Are the provisions of Article 134 [of Directive 2006/112] to be interpreted as restricting exemption only to supplies which are “closely linked” (in the sense of peripheral) to the “transactions exempted” or to any supply falling within Article 132(1)(m) [of that directive]?
4. In circumstances where the non-profit-making organisation by reference to its publicly stated aims, regularly and consistently permits non-members to play golf, what is the interpretation to be placed on the “basic purpose” of making the charge to non-members?
5. For the purposes of Article 134(b) [of Directive 2006/112] to what must the “additional income” be additional?
6. If income derived from providing access to sporting facilities to non-members is not to be treated as “additional income” for the purposes of Article 134(b) [of Directive 2006/112], does Article 133(d) [of that directive] permit a Member State to exclude such income from exemption if it is likely to cause distortion of competition to the disadvantage of commercial enterprises subject to VAT, whilst not at the same time withdrawing the exemption from income derived from providing membership to members of the same non-profit-making organisations if the members’ subscriptions are themselves likely to cause at least some distortion of competition?
7. In particular, is it necessary for any condition implemented under Article 133(d) [of Directive 2006/112] to apply to all services supplied by the non-profit-making organisation otherwise falling within the exemption or is it permissible to allow a partial restriction i.e. permitting exemption for the supply of the right to play golf to members but not to non-members where both membership and non-membership supplies are in competition with commercial organisations?
8. What, if any, is the difference in requirement between Article 133(d) [of Directive 2006/112] which requires a “likely distortion of competition” and that in Article 134(b) [of that directive] which envisages only the existence of direct competition?
AG Opinion
None
Decision
1. Article 134(b) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as not excluding from the exemption in Article 132(1)(m) of that directive a supply of services consisting in the grant, by a non-profit-making body managing a golf course and offering a membership scheme, of the right to use that golf course to visiting non-members of that body.
2. Article 133(d) of Directive 2006/112 must be interpreted as not allowing the Member States, in circumstances such as those in the main proceedings, to exclude from the exemption in Article 132(1)(m) of that directive a supply of services consisting in the grant of the right to use the golf course managed by a non-profit-making body offering a membership scheme when that supply is provided to visiting non-members of that body.
Summary
Article 134(b) of Council Directive 2006/112/EC must be interpreted as not excluding from the exemption in Article 132(1)(m) of that directive a supply of services consisting in the grant, by a non-profit-making body managing a golf course and offering a membership scheme, of the right to use that golf course to visiting non-members of that body. Article 133(d) of Directive 2006/112 must be interpreted as not allowing the Member States, in circumstances such as those in the main proceedings, to exclude from the exemption in Article 132(1)(m) of that directive a supply of services consisting in the grant of the right to use the golf course managed by a non-profit-making body offering a membership scheme when that supply is provided to visiting non-members of that body.
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