EU – Baltic States, Financial Services, Legislation, Markets and Companies, Taxation

The Netherlands’ case

The European Commission has decided to refer The Netherlands to the European Court of Justice for failing to fully comply with EU rules on VAT exemptions for water sports activities.

Under the VAT Directive, the supply of sport or physical education services by non-profit making organisations is exempt from VAT.

However, the Netherlands only grants that exemption if the organisations in question do not employ workers to supply these services, but volunteers. The Commission considers that this additional condition is not allowed by the VAT Directive.

On the other hand, The Netherlands allows a VAT exemption for the letting of berths and moorings for vessels (provided by such water sport organisations), even when it is not linked to sport activities. The Commission considers that this is too wide an application, and that the VAT exemption should only be given when these berths and vessel storage places are let for sport activities.

The Commission already sent a reasoned opinion formally requesting The Netherlands to comply with the VAT Directive, but the Dutch authorities refused to change the law.

Reference: European Commission, IP/14/1040 “Taxation: Commission refers The Netherlands to the Court over VAT exemption for water sport activities”, 25/09/2014.

Germany’s case

The European Commission has decided to refer Germany to the European Court of Justice regarding its rules on VAT refund applications which discriminate against non-EU operators.

Under German VAT legislation, taxable persons established outside the EU must personally sign the application form to be refunded the VAT charged on goods or services.

Operators established in Germany or in the EU, on the other hand, can authorise a third person to sign or submit their refund form to recover VAT.

The Commission considers that the German requirement for third country operators goes against the principles of effectiveness, proportionality and equivalence laid down in EU law. There is no provision under EU legislation which requires VAT refund forms to be personally signed. Moreover, requiring a personal signature from non-EU operators, but not EU ones, can make it excessively difficult for those not established in the EU to obtain a VAT refund.

The Commission considers that Germany's stated aim of combating tax evasion and ensuring a proper refund procedure could be achieved through other means, such as the appointment of a tax representative.

The Commission sent a reasoned opinion to Germany in September 2012 asking for these rules to be amended (see MEMO/2012/708). However the German authorities did not bring their rules into conformity with EU law.

Reference: European Commission, IP/14/1038 “Taxation: Germany referred to Court over its rules on VAT refunds for non-EU operators”, 25/09/2014.  

More on VAT issues in the EU:

= For press releases on infringement cases in the taxation or customs field see:
http://ec.europa.eu/taxation_customs/common/infringements/infringement_cases/index_en.htm;

= For the latest general information on infringement measures against Member States see:
http://ec.europa.eu/community_law/index_en.htm;

= On the September infringement package decisions: MEMO/14/537;

= On the general infringement procedure: see MEMO/12/12.