ECJ C-581/19 (Frenetikexito) – Questions – Absorption: dietary advice exempt, or ancillary to physical exercise?

Unofficial translation/summary:

  • The applicant is a company that is involved in the management and operation of sports institutions, welfare and fitness activities, foodstuffs and dietetic food.
  • The applicant offers programs that only include fitness services, and programs that also include nutritional advice.
  • It was up to the customer to choose the desired plan.
  • When the customer subscribed to the food service, it was charged regardless of whether the customer made use of it (the applicant paid no VAT on this).
  • The applicant stated on the invoices issued the respective amounts for the fitness service and nutritional advice.
  • After a tax audit, the tax authorities have issued additional tax assessments for the applicant for the years 2014 and 2015 (€ 12,253.05).
  • The tax authorities state that the applicant should have paid VAT for the food services.
  • The dietary advice would be secondary to physical exercise, since the client pays for it whether or not he uses it.
  • The tax authorities ask the Court to refer questions for a preliminary ruling in order to determine: (i) whether the manner in which the applicant draws up its invoices amounts to an artificial division of services, and (ii) whether the VAT exemption can be applied for health-related activities to food consultation services that have never been performed.

The dispute concerns whether the food service provided by the applicant is ancillary  to the fitness service provided by the applicant, as a result of which the two services together form a single service or, on the other hand, separate and independent services. If it is judged that the food service is subordinate to the fitness service, that food service will receive the same tax treatment as the fitness service and will therefore be subject to VAT. If, on the other hand, it is judged that this service constitutes an independent service, this service will be exempt from VAT. In that case, it must be determined whether it is necessary for the service to actually be provided or whether it is sufficient for the service to be offered.

Preliminary questions:

1) If a company, as in the present case,

as a main activity offering fitness and wellbeing activities and also offering health related activities, including nutrition services, nutrition advice and physical fitness evaluations, and massages;
offering its customers programs that exclusively include fitness services and programs that also include food services, it must then be decided, for the purposes of Article 2 (1) (c) of Directive 2006/112 / EC of 28 November 2006, that health-related activities, and more particularly the food service, are subordinate to the fitness and welfare activities, which means that the ancillary service should receive the same tax treatment as the main service, or should it be decided that health-related activities, and more particularly the food service, and the distinguish between fitness and well-being activities and are independent services, so that the respective tax treatment would apply to each of these activities?
(2) For the application of the exemption provided for in Article 132 (1) (c) of Directive 2006/112 / EC of 28 November 2006, is it necessary for the services referred to in that provision to be actually provided, or is it sufficient for the application of that exemption that the services are offered, so that their use depends solely on the will of the customer?

Source: (Dutch)

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