VAT Exemption for Dance Lessons

A sole proprietorship operated by a dance teacher underwent a tax audit. The tax authorities challenged the VAT exemption applied to dance teaching services.

Applicable Rules:

• Article 261, 4-4° b of the French Tax Code (CGI):
  Lessons or courses related to school, university, professional, artistic, or sports education, provided by individuals who are paid directly by their students, are exempt from VAT.
• Court Interpretation (CAA):
  Only lessons provided personally by the teacher qualify for the exemption.
  → If the teacher uses other individuals to deliver lessons, the exemption does not apply.

Case Details:

• Some lessons were taught by other instructors, paid through fee-sharing arrangements.
  → In principle, these lessons are not VAT-exempt.
• Administrative Doctrine (BOI-TVA-CHAMP-30-10-20-50 §370):
  VAT exemption is allowed if the activity is carried out without any employees, even if the teacher has a dedicated studio.
  → The teacher had no employees.

CAA Decision:

• The teacher could rely on the doctrine (Article L.80 A of the Tax Procedure Code) to exempt the lessons personally taught by them from VAT.
• Lessons taught by other instructors remain subject to VAT.

Key Takeaways for Practice:

• VAT exemption for artistic or sports lessons is strictly personal.
• Involvement of other instructors (even without an employment relationship) jeopardizes the exemption.
• The doctrine provides a tolerance when there are no employees, but only for lessons taught by the teacher themselves.

Source Legifrance.gouv.fr