On 7 October 2019, the European Court of Justice gave its order (judgment) in case C-47/19 (HA). It answers the question if sailing and surfing tuition is exempt from VAT.
Article in the EU VAT Directive
Article 132(1)(h), (i) and (j) of Council Directive 2006/112/EC
1. Member States shall exempt the following transactions:
(h) the supply of services and of goods closely linked to the protection of children and young persons by bodies governed by public law or by other organisations recognised by the Member State concerned as being devoted to social wellbeing;
(i) the provision of children’s or young people’s education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto, by bodies governed by public law having such as their aim or by other organisations recognised by the Member State concerned as having similar objects;
(j) tuition given privately by teachers and covering school or university education;
HA operates two surfing and sailing schools in Germany, one of which is located on Fehmarn (Schleswig-Holstein) and the other in Hamburg. For this purpose, he employs several surfing and sailing instructors and also teaches a part of the courses themselves.
HA generated revenues from surfing and sailing lessons, renting and selling surf items, and accommodating students. The surfing and sailing courses were partly organized for schools or universities where they belonged to the sports program or vocational training of the sports teachers and were included in the grades. The costs of these courses have in certain cases been borne by the school or university.
The competent authority did not issue HA with a certificate of exemption under Paragraph 4 (21) of the UstG that its surfing and sailing schools were preparing for a profession or an examination before a legal person under public law.
Nevertheless, HA declared – in addition to taxable ones – VAT-free transactions, most of which were obtained through surfing and sailing courses conducted with school classes, school sports groups or university courses.
The Finanzamt Hamburg-Barmbek-Uhlenhorst found that the conditions for a tax exemption for those transactions had not been met.
Does the concept of school and university education in Article 132(1)(i) and (j) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (‘Directive 2006/112’) also include surfing and sailing tuition? Is it sufficient if such tuition is offered in at least one school or university in the Member State?
In order to find that there is school or university education within the meaning of Article 132(1)(i) and (j) of Directive 2006/112, is it necessary for the tuition to be included as part of the students’ grades, or is it sufficient if the surfing or sailing course takes place in the context of organised school or university activities, such as a class trip?
Is it possible for a surfing and sailing school to be recognised as an organisation with a similar object, within the meaning of Article 132(1)(i) of Directive 2006/112, on the basis of the regulations regarding school or university law, whereby even external surfing and sailing courses form part of physical education or the university education of physical education teachers where a grade or some other certificate of achievement is awarded, and/or on the basis of a public interest in sporting activities? Is a direct or indirect absorption of the costs of the courses by the school or university necessary for such recognition?
Do surfing or sailing courses in the context of a class trip represent the supply of a service closely linked to the protection of children and young persons within the meaning of Article 132(1)(h) of Directive 2006/112? If so, is it necessary for that protection to last for a specific period of time?
Does the wording ‘tuition given privately by teachers and covering school or university education’ in Article 132(1)(j) of Directive 2006/112 require that the taxable person give the tuition himself?
The concept of ‘school and university education’ for the purpose of Article 132(1)(i) and (j) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as not including surfing and sailing tuition provided by surf and sailing schools, such as those at issue in the main proceedings, for schools or universities in which that tuition may, respectively, form part of the sporting activities programme or the training for physical education teachers and count towards the grade given to such pupils or students.
The concept of a supply of services ‘closely linked to the protection of children and young persons’ for the purpose of Article 132(1)(h) of Directive 2006/112 must be interpreted as not including surfing and sailing tuition provided by surf and sailing schools, such as those at issue in the main proceedings, regardless of whether that tuition is provided in the context of a class trip.
This decision is not different from case C-449/17, in which the ECJ decided that driving lessons also do not fall under the VAT exemption for educational services. It will be interesting what the ECJ will decide in case C-373/19, in which the question is raised if swimming lessons may fall under this VAT exemption.
Similar ECJ cases
- C-449/17 (A & G Fahrschul-Akademie GmbH) – Judgment – Motor vehicle driving tuition provided by a driving school is not VAT exempted
- C-373/19 (Dubrovin & Troger – Aquatics) – VAT exemption for educational services, Swimming lessons
How did countries implement the case? Your feedback appreciated! Let us know