© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
H10. Sporting exemptions
THE EXEMPTIONS
Domestic law
"(1) The grant of a right to enter a competition in sport or physical recreation where the consideration for the grant consists in money which is to be allocated wholly towards the provision of a prize or prizes awarded in that competition.
(2) The grant, by an eligible body established for the purposes of sport or physical recreation, of a right to enter a competition in such an activity.
(3) The supply by an eligible body to an individual of services closely linked with and essential to sport or physical education in which the individual is taking part." (VATA 1994, Sch 9, Group 10)
EU law
"Member States shall exempt the following transactions:
[...]
(m) the supply of certain services closely linked to sport or physical education by non-profit-making organisations to persons taking part in sport or physical education;" (Article 132(1)(m))
- Reference to 'certain services' cannot be used to exclude certain groups of recipients
"[39] The possible restrictions on the benefit of the exemptions provided for by Article 13A of the Sixth Directive may be imposed only in the context of the application of paragraph 2 of that provision (see Hoffmann, paragraph 39). Thus, when a Member State accords an exemption for certain services closely linked to sport or physical education supplied by non-profit-making organisations, it may not make that exemption subject to conditions other than those laid down in Article 13A(2) of the Sixth Directive (see Case C‑124/96 Commission v Spain [1998] ECR I‑2501, paragraph 18). Since that provision does not lay down restrictions as regards recipients of the services in question, the Member States have no power to exclude a certain group of recipients of those services from the benefit of the exemption in question." (Canterbury Hockey Club C-253/07)
- Purpose is to promote participation in sport or physical education by large groups of the population
"[23] With regard, lastly, to the purpose of Article 132(1)(m) of the directive, it should be recalled that the objective of that provision is to encourage certain activities in the general interest, namely, services closely linked to sport or physical education supplied by non-profit-making organisations to persons taking part in sport or physical education, and, therefore, that provision seeks to promote such participation by large sections of the population (see, to that effect, judgments of 21 February 2013, Žamberk, C‑18/12, EU:C:2013:95, paragraph 23, and of 19 December 2013, Bridport and West Dorset Golf Club, C‑495/12, EU:C:2013:861, paragraph 20)." (The English Bridge Union Limited C-90/16)
- Non-profit refers to absence of financial advantage to members (not absence of surplus)
"[48] The Court has held, with regard to Article 13A(1)(m) of the Sixth Directive, to which Article 132(1)(m) of the VAT Directive corresponds, that an organisation is to be classed as ‘non-profit-making’, within the meaning of the former provision, by having regard to the aim which the organisation pursues, that is to say that the organisation must not have the aim, unlike a commercial undertaking, of achieving profits for its members. Where the competent national authorities have found that an organisation satisfies that requirement, having regard to the objects set out in its constitution, the fact that the organisation subsequently achieves profits, even if it seeks to make them or makes them systematically, will not affect the original categorisation of the organisation as long as those profits are not distributed to its members (see, to that effect, judgment of 21 March 2002, Kennemer Golf, C‑174/00, EU:C:2002:200, paragraphs 26 to 28)." (Golfclub Schloss Igling C-488/18)
"[33] Although that distinction is not to be found in any of the other language versions of the Sixth Directive, it is borne out by the objective of the provisions contained in Article 13A thereof. As the Advocate General points out in paragraph 57 to 61 of his Opinion, it is not profits (bénéfices), in the sense of surpluses arising at the end of an accounting year, which preclude categorisation of an organisation as non-profit-making, but profit (profit) in the sense of financial advantages for the organisation's members. Consequently, as the Commission also points out, the condition set out in the first indent of Article 13A(2)(a) essentially replicates the criterion of non-profit-making organisation as contained in Article 13A(1)(m)." (Kennemer Golf C-174/00)
ELIGIBLE BODY
- No financial advantage to members at dissolution
"[50] The non-profit-making objective of those organisations presupposes that they must not achieve profits for their members, throughout their existence, including at the time of their dissolution. If that were not the case, such an organisation could, in effect, circumvent that requirement by distributing to its members, after its dissolution, all the surpluses made from all of its activities, despite having benefited from tax and other advantages as a result of its classification as a ‘non-profit-making organisation’." (Golfclub Schloss Igling C-488/18)
(1) RIGHT TO ENTER COMPETITION (PRICE PAYS FOR PRIZES)
VAT
XX
(2) RIGHT TO ENTER COMPETITION (BY ELIGIBLE BODY)
VAT
XX
(3) SERVICES CLOSELY LINKED TO SPORT (BY ELIGIBLE BODY)
Sport
- Must have a non-negligible physical element
"[27] It follows, therefore, from the wording of Article 132(1)(m) and from the systematic and teleological interpretation of Directive 2006/112 that the provision relates only to activities characterised by a not negligible physical element." (The English Bridge Union Limited C-90/16)
- Activity need not be carried in a regular or organised manner
"[23] As regards the aim of Article 132(1)(m) of the VAT Directive, it must be noted that that provision has the objective of encouraging certain activities in the public interest, namely services closely linked to sport or physical education which are provided by non-profit-making organisations to persons taking part in sport or physical education. Accordingly, the provision seeks to promote such participation by large sections of the population.
[24] An interpretation of that provision limiting the scope of the exemption which it lays down to sporting activities which are engaged in in an organised or systematic manner or aimed at participation in sports competitions would run counter to that objective.
[25] In the light of the foregoing, the answer to the first question is that Article 132(1)(m) of the VAT Directive 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." (Mesto C-18/12)
- But distinguish recreation
"[34] As regards, in particular, aquatic areas, it is necessary for the national court to take into account, inter alia, whether they lend themselves to swimming of a sporting nature, in that they are, for example, divided into lanes, equipped with starting blocks and of an appropriate depth and size, or whether they are, on the contrary, arranged so that they lend themselves essentially to recreational use." (Mesto C-18/12)
Closely linked
- Access to a golf course is closely linked (to member or non-member)
"[21] Given that access to a course is necessary in order to play golf, the supply consisting in the grant of the right to use a golf course is closely linked to sport within the meaning of Article 132(1)(m) of Directive 2006/112, regardless of whether the person concerned plays golf on a regular or organised basis or in order to participate in sports competitions.
[22] It follows that if that supply is provided by a non-profit-making body, it is covered by the exemption from VAT provided for in Article 132(1)(m), it being immaterial whether it is provided to a member of the body or to a visiting non-member." (Bridport and West Dorset Golf Club Limited C-495/12)
- Does not include advice about marketing etc.
"[32] However, to be eligible for that exemption, the services must, in accordance with Article 13A(1)(m) and the first indent of Article 13A(2)(b) of the Sixth Directive, be supplied by a non-profit-making organisation and they must be closely linked and essential to sport, since the true beneficiaries of those services are the persons taking part in sport. By contrast, supplies of services which do not meet those criteria, particularly those linked to sports clubs and to their operation such as, for example, advice about marketing and obtaining sponsors, cannot benefit from that exemption." (Canterbury Hockey Club C-253/07)
To an individual
- Supply need not be directly to individual (e.g. to club)
"[35] Therefore, the reply to the first question referred must be that Article 13A(1)(m) of the Sixth Directive is to be interpreted as meaning that, in the context of persons taking part in sport, it includes services supplied to corporate persons and to unincorporated associations, provided that – which it is for the national court to establish – those services are closely linked and essential to sport, that they are supplied by non-profit-making organisations and that their true beneficiaries are persons taking part in sport." (Canterbury Hockey Club C-253/07)
- Cannot be limited to certain categories of recipient (e.g. members)
"[28] In addition, it must be borne in mind that, unlike the exemption in Article 132(1)(l) of Directive 2006/112 that is expressly limited to supplies of services and goods by the bodies referred to therein ‘to their members’, the exemption for supplies of services closely linked to sport in Article 132(1)(m) of that directive is not so limited, even though under the European Commission’s original proposal for the Sixth Directive the latter exemption was also restricted to supplies of services and goods to members of the bodies concerned, as is apparent from Article 14A(1)(j) of the Proposal of 20 June 1973 for a sixth Council Directive on the harmonisation of legislation of Member States concerning turnover taxes – Common system of value added tax: uniform basis of assessment (COM(73) 950 final)." (Bridport and West Dorset Golf Club Limited C-495/12)
Article 134 conditions must be satisfied
"[33] Finally, it is important to point out that, under the second indent of Article 13A(2)(b) of the Sixth Directive, services are not to be granted exemption under Article 13A(1)(m) if their basic purpose is to obtain additional income for the organisation by carrying out transactions which are in direct competition with those of commercial enterprises liable for VAT." (Canterbury Hockey Club C-253/07)
See H3. Closely related supplies.
- Query how 'essential to the transactions exempted' is applied (essential to play sport)
"[24] So far as concerns the supply at issue in the main proceedings, namely the grant of the right to use a golf course, it is common ground that it is essential to the transactions exempted, for the purposes of Article 134(a) of Directive 2006/112, given that the grant of that right is necessary for golf to be played." (Bridport and West Dorset Golf Club Limited C-495/12)