The European Court of Justice (ECJ) has ruled that services provided by sports organisations to member clubs may be exempt from VAT. Under the sixth VAT Directive, certain services closely linked to sport supplied by a non-profit making organisation to “persons” taking part in sport are to be exempt from VAT.

Canterbury Hockey Club and Canterbury Ladies Hockey Club are members of England Hockey and pay an affiliation fee. England Hockey provides its member clubs with services such as coaching, umpires, a network of development offices and advice on marketing and sponsorship. However, the UK tax authorities claimed that the affiliation fees for England Hockey’s services did not fall within the exemption in the VAT Directive because the exemption only applied to services to natural “persons” and not legal persons such as clubs. The English High Court referred the issue to the ECJ.

In Canterbury Hockey Club C-253/07, the ECJ noted the particular organisation of sport and considered that if the exemption were to be limited to services to natural persons, a large number of sporting activities would fall outside the scope of its remit. Such a result would run counter to the intention of the exemption. Consequently, the ECJ considered that the exemption could apply to services to legal persons as well as natural persons, provided a number of conditions were met. First, the services must be supplied by a non-profit making organisation. Second, the services must be closely linked and essential to sport. Third, the true beneficiaries of those services must be persons taking part in sport. Services such as advice on marketing or commercial activities do not meet these criteria. However, services supplied in connection with sports clubs are generally eligible to benefit from the VAT exemption.