Netherlands - Supreme Court Decision Concerning VAT Rate for Services of Online Sports Platforms

The Supreme Court of the Netherlands( Tax Section) issued a judgment on the appeal case between company X, the operator of a digital platform for sports events, and the State Secretary of Finance.

This is the final ruling in the case initiated in 2021. Two instances have already issued judgments: The Hague District Court in 2021 and the Court of Appeal in 2022.

Facts of the Case

The appellant charges sports enthusiasts a fee to access workout and instruction videos on a digital platform. The platform also provides access to blogs and videos with recipes and tips for a healthy lifestyle.

Subscribers receive a customized sports schedule and can follow the program online, performing the training at home or another location. Focusing on the Dutch and Belgian markets, the company does not have a physical sports facility for subscribers.

The company paid the August 2019 return VAT at the general rate. However, it later objected to this, arguing that the reduced rate should apply. In its appeal, the company stated that the return should be annulled and the requested refund should be granted, presenting a compelling case for a reduced VAT rate.

The Hague District Court found the appeal unfounded. The company appealed against this ruling before the Hague Court of Appeal, which also found the appeal unfounded in 2022. While assessing the case's merits, the Hague Court of Appeal referred to the ECJ Baštová judgment, stating that the EU law concept of ‘sports accommodation’ relates to a space equipped for practicing sports and used for that purpose. 

It further determined that the BV company's provision of the app and instructions for designing the space where the subscriber practices the sport do not correspond to the EU law concept. Therefore, the company does not provide sports accommodation, not even if the instructions given to the subscriber are taken into account. 

If the space in which the subscriber does his exercises already qualifies as a sports accommodation within the meaning of the Baštová judgment, the right to use it has not been granted to the subscriber by the BV company. The subscriber decides where he will play the video and do the exercises. In conclusion, services provided by the company cannot be considered as the categories of services that fall under the reduced rate.

Finally, on July 5, 2024, the Supreme Court of the Netherlands, after assessing the company's complaint, decided that these complaints could not lead to the annulment of previous rulings, thus confirming the findings of the Hague District Court and the Hague Court of Appeal.

Conclusion

With the confirmation of the first and second rulings made by the Hague District Court and the Hague Court of Appeal, respectively, it is clear that reduced VAT rates cannot apply to online sports platforms, imposing a general VAT rate on such platforms.

Source: Supreme Court of the Netherlands Tax Chamber Case No. 22/02472, Court of Appeal The Hague Case BK-21/00684, The Hague District Court Case No. AWB - 20_5038, ECJ Case C‑432/15