In a court case procedure, conducted by our VAT partner Kim Sinnige, the Dutch Supreme Court decided on 17 January 2025 ECLI:NL:HR:2025:99 (available only in Dutch) that a partnership that provided surfing lessons from furnished units on a beach could apply the reduced VAT rate of 9% on surfing lessons. This case empasizes that a complete understanding of the activities of a client are key, but also that getting approval from the tax authorities and the court can take a lot of time. In this article we will explain a bit on this recent success.
Reduced rate for sports facilities
The VAT rules for services related to sports are quite complex. Non-profit organizations like sport clubs are mainly exempt from VAT for services related to sports or sports facilities. Profitable businesses that get a subsidy or can use sports accommodations for a reduced fee are also considered non-profit organizations. Other businesses that provide services relating to sports must charge Dutch VAT. In case the services can be considered as the use of a sports accommodation (immovable property), the reduced VAT rate applies. If that is not the case, the regular VAT rate of 21% applies.
So if you follow bootcamp lessons in a park, normally 21% Dutch VAT applies. If the bootcamp lessons are on or around a sports accommodation, 9% Dutch VAT applies, and if the lessons are provided by the non-profit gymnastics club, it is VAT exempt.
Court case
The key question in the court case was the role of the accommodation (the furnished units) on the beach. As the beach and sea are a public area, these cannot be considered as sports accommodation, as following the VAT rules, the business should give allowance to use such accommodation. As the actual surfing is performed in the sea, it was questioned if the accommodation should be considered to be part of the services related to surfing lessons. The Dutch tax authorities did not believe so. The District Court of Norther-Holland judged positive for the business, but the High Court of Amsterdam did not agree and judged negative. At last, the Supreme Court decided positive. The procedure was about surfing lessons in 2014, so it took over 10 years to get the reduced VAT rate granted.
The Supreme Court judged that surfing lessons should be considered as a whole. That includes that preparations and instructions beforehand and debriefing and change clothing afterwards. It is not required that the actual sports are performed on or within the accommodation. This is in line with other court cases.
Why is this important?
If your business is not involved in sports accommodations or services in that respect, this judgement can still be important. This could be important in cases like:
- Discussions if an accommodation or building should be considered as immovable or not; the units on the beach are disassemled and rebuild each year;
- Discussions about the scope of a supply or service; although different parts can be distinguished, the Supreme Court took the service as one service with numerous aspects;
- Discussions where the facts are crucial to define a correct VAT treatment; it appeared very important to get clear all aspects on the surfing lessons – not just the sea-part.
