On February 21, 2013, the ECJ issued its decision in the case C-18/12 (Město Žamberk).
Context: Taxation – VAT – Directive 2006/112/EC – Article 132(1)(m) – Exemption – Supply of services closely linked to sport or physical education – Taking part in sporting activities of a non-organised and unsystematic nature – Municipal aquatic park
Article in the EU VAT Directive
Article 132(1)(m) of the EU VAT Directive 2006/112/EC
Article 132 (Exemption)
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
- In return for payment of an entrance fee město Žamberk provides a municipal aquatic park, in which there are, in particular, a swimming pool divided into several lanes and equipped with diving boards, a paddling pool for children, water slides, a massage pool, a natural river for swimming, a beach-volleyball court, areas for table tennis and sports equipment for hire. The referring court notes that, to its knowledge, no sports club or organisation carries out its activities on the site and no school or other body use the site for physical education.
- In its tax return for the tax period of the first quarter of 2009, město Žamberk declared excess VAT of CZK 198 182. In that regard, the Finanční úřad v Žamberku (Tax Office, Žamberk) considered that the services supplied by the municipal aquatic park of město Žamberk constituted exempt services without a right to deduct VAT and, consequently, by notice demanding repayment of 17 June 2009, set the excess for the tax period at issue at CZK 154 105.
- Since that repayment notice was confirmed by a decision of the Finanční ředitelství v Hradci Králové (Tax Directorate, Hradec Králové) of 15 December 2009, město Žamberk brought an action before the Krajský soud v Hradci Králové (Regional Court, Hradec Králové), which quashed the decision of the Finanční ředitelství v Hradci Králové. The latter then brought an appeal on a point of law before the Nejvyšší správní soud (Supreme Administrative Court).
- Taking account of the definition of the concept of ‘sport’ laid down, at the national level, in Paragraph 2 of Law No 115/2001, the Nejvyšší správní soud seeks to ascertain, in essence, whether non-organised and unsystematic sporting activities may be categorised as ‘taking part in sport’ within the meaning of Article 132(1)(m) of the VAT Directive.
- It also raises the question of whether the fact that an aquatic park such that at issue in the main proceedings offers its visitors not only the opportunity to take part in certain sporting activities but also amusement or rest, and whether the fact that the intention of all visitors is not necessarily to take part in sporting activities, may have an effect on the applicability of Article 132(1)(m) of the VAT Directive.
- The Nejvyšší správní soud states that its request does not concern the interpretation of the concept of a ‘non-profit making organisation’ within the meaning of that provision, given that the question whether město Žamberk falls within that concept is not submitted to it for assessment in the context of the dispute in the main proceedings on account of Czech procedural law. Furthermore, the questions referred do not concern the supplementary conditions for an exemption from VAT set out in Article 134 of the VAT Directive.
Questions
AG Opinion
None
Decision
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 non-organised and unsystematic sporting activities which are not aimed at participation in sports competitions may be categorised as taking part in sport within the meaning of that provision.
2. Article 132(1)(m) of Directive 2006/112 must be interpreted as meaning that access to an aquatic park offering visitors not only facilities for engaging in sporting activities but also other types of amusement or rest may constitute a supply of services closely linked to sport. It is for the referring court to determine whether, in the light of the interpretative guidance provided by the Court of Justice of the European Union in the present judgment and having regard to the specific circumstances of the case in the main proceedings, that is the position in that case.
Summary
The Czech město Žamberk provides a municipal aqua park against payment of an entrance fee. The aqua park includes a swimming pool, a paddling pool for children, water slides, a massage pool, a swimming pool-natural river, a beach volleyball court, table tennis rooms and sports equipment that can be hired. However, no sports activities are carried out in an organized context. According to the Czech tax authorities, the services provided by the municipal aquapark of the město Žamberk constitute exempt services without the right to deduct VAT. The tax authorities therefore correct the VAT return of the město Žamberk. The Czech court has referred questions for a preliminary ruling in this case.
The European Court of Justice (CJEU) has ruled that sports activities which are neither practiced in an organized context nor on a regular basis and which do not have the purpose of participating in sports competitions, are regarded as the practice of sport within the meaning of art. 132 paragraph 1 part m EU Directive 2006/112 can be considered. Furthermore, the CJEU notes that access to the aquapark can be a service closely related to the practice of sport.
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