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Brussels, 29 October 2009

VAT: The Commission tackles the Netherlands over its exemption for fundraising activities

The European Commission has formally requested the Netherlands to amend its legislation on the VAT exemption applicable to certain fundraising activities. The request is in the form of a reasoned opinion which is the second stage of the infringement proceedings provided for in Article 226 of the Treaty. If the Netherlands fails to comply with the reasoned opinion within two months, the Commission may refer the matter to the Court of Justice of the European Communities.

The VAT Directive (Article 132 (1)) provides for a VAT exemption on the supply of services and goods in connection with fundraising events. This provision also clearly identifies which organisations are able to benefit from the exemption on the basis of their activities.

The Court of Justice has made clear on several occasions that the exemptions in the VAT Directive are to be interpreted strictly, since they constitute exceptions to the general principle that VAT is to be levied on all services supplied for consideration by a taxable person.

A uniform application of the exemptions, in conformity with the Directive, is necessary in order to ensure equal treatment between the Member States in respect of the Communities' own resources. The Commission has questioned the Dutch legislation because it is of the opinion that the exemption of Article 132(1)(o) is being applied too widely. The Dutch 'fundraising provision' applies to organisations whose primary activities are exempt on grounds other than those referred to in the exemption provision. Furthermore, organisations that fail to fulfil the laid out under the conditions of the Directive are granted the exemption for their fundraising activities.

In addition, the Dutch law provides for an exemption from VAT for the supply of goods and services by fundraising organisations which work to obtain support for the activities of an organisation which is active in the social, recreational or cultural sphere. Given the fact that the former organisations are themselves usually not active in the social, recreational or cultural sphere, the Commission is of the opinion that they cannot benefit from the exemption of Article 132(1)(o) of the VAT Directive.

The Commission's reference number is 2008/4114.

For the latest information on infringement proceedings, go to:

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