Interested party gives the opportunity to participate in bets on horse races. It has a license from the Gaming Authority to organize a so-called “totalizer” in the Netherlands. According to the license, the interested party may merge bets for the amounts, intended for prizes, in a ‘local pool’ (bets deposited with interested party) or a ‘common pool’ (bets deposited with interested party and other (foreign) providers of bets).
To be able to offer bets on foreign horse races in the Netherlands, the interested party has entered into an agreement with foreign totalizer providers. Reverse charged VAT was accounted for.
In this procedure, the interested party asserts that this VAT was incorrectly paid; the services would be ancillary to an exempt main service provided to the interested party (a game of chance).
The Court in Amsterdam ruled that the services were VAT taxable. The agreements do not include a right to participate in a game of chance, because the interested party does not have the position of a player, with winning and losing opportunities. The outcome of the bet does not concern the interested party; its financial interest is only in the amount that can, in the end, be withdrawn from the prizes. The service providers grant a license to the interested party, and this main supply is not exempt from VAT.
The Supreme Court agrees with the Amsterdam Court that the formation of a common pool does not mean that the foreign totalizer offers a game of chance to the interested party. The interested party has also failed to demonstrate that the totalizer providers have made agreements that result in them allocating profit opportunities to the interested party.
Source: rechtspraak.nl
Author: Joyce Westerveld, VAT Advisor at RED
