New: 2023-05-05
With regard to legal developments, there is no longer any reason to apply the position “”Member fees”” . What was stated in the position can be seen as clarifications as it appears from practice. The information now appears directly from the Legal Guidance.
Membership fees paid to organizations can in some cases be compensation for a provision. In the normal case, an organization is a form of interest association for the members whose task is to look after their interests. If the main purpose of the organization is public benefit or has a main purpose other than providing discounts, and the membership fee is also not directly related to a provision of the organization, the membership fee is not turnover. This means that there is no tax liability for the membership fee in these situations. In the case of such organizations whose main purpose is to provide their members with various discount offers, and the organization thus conducts economic activity, there is, on the other hand, a direct connection between the right and the fee,
When it comes to an organization that carries out economic activities, an assessment must therefore be made as to whether the membership fee constitutes compensation for a provision that may entail tax liability. This means that it must be determined whether there is an actual provision for which the membership fee can be considered a compensation.
Membership fees without consideration
Membership fees in trade associations without a direct consideration to the individual member are not turnover. The European Court of Justice has ruled that an annual fee charged by an organization whose task was to market and improve the quality of apples and pears in England and Wales was not compensation for the provision of a service under Article 2(1)(c) of the VAT Directive. The fee was paid by different growers in order for the organization to safeguard their common interests and it was determined based on the growers’ hectare of land. The European Court of Justice found that the benefits resulting from the organization’s work accrued not only to these growers but to the industry as a whole. The growers thus received only an indirect benefit from the organization’s services.102/86, Apple and Pear).
Membership fees in sports associations
The membership fee in a sports association can in some cases be a compensation for the provision of services. The European Court of Justice has assessed the question of whether annual fees paid by members of a sports association could be compensation for the provision of services. The fixed annual fee was not dependent on the extent to which each member used the golf course. Some members never or only occasionally used the association’s facilities, but were still obliged to pay the fee. The court considered that the service provided by the association was that the members were given access to the sports facilities on a permanent basis, not that they were allowed to use occasional services at their own request. A direct connection was therefore considered to exist between the annual fee and the services provided by the association ( C-174/00, Kennemer Golf & Country Club).
Student discounts
Regarding discounts that different companies give to e.g. students in general, these are not tied to a specific membership in an organization. This type of discount therefore does not affect whether there is turnover for a membership fee or not. This also applies if a membership card is used as proof to be able to show that the person is e.g. student.
Discount cards and coupon booklets
It can also happen that so-called membership cards are sold which are really just different cards with discount possibilities. The Tax Court has assessed that the sale of discount cards and coupon booklets was turnover (SRN 1994-06-23 and SRN 1996-05-14 respectively). This means that these membership cards must be seen as different transfers of such rights which, in terms of value added tax, constitute sales of services. The Tax Agency shares the Tax Court’s assessment.
Mediation of membership cards
The assessment will be the same if it is a question of a membership sold by different agents or in “”own name””. How the sale is carried out does not therefore affect the assessment, provided that it is clear that it is a question of membership in a particular organization being sold. What is decisive is thus who is the contracting party in relation to the customer, i.e. the new member.
In the event that it is a question of such a membership card, which is actually comparable to various booklets with discount coupons, sales in “”own name”” means that taxation must take place in respect of the entire supply by the seller. Only in the case of an intermediary should the supply of the membership card alone be taxed by the actual contracting party, i.e. the organisation. It must be clear to the purchaser of the membership card that the actual contracting party is other than the intermediary.
The intermediary commission received by the intermediary from the organization for the memberships sold constitutes a payment for a supply that is subject to VAT.
Source: skatteverket.se
