VAT treatment of green fees charged by member-owned golf clubs to non-members

This eBrief updates Revenue’s position as set out in eBrief No. 09/14 following the judgment of the European Court of Justice (CJEU) in the Bridport & West Dorset Golf Club Ltd case (C-495/12)

1. Application of the European Court of Justice decision to Ireland

The CJEU held that where a supply of golf facilities is made by a non-profit making organisation it is immaterial whether it is provided to a member or a visitor, and found that green fees received from non-members could benefit from the exemption set out in Article 132.1(m) of the EU VAT Directive (112/2006/EC).

Revenue accepts that as a consequence of the judgment, green fees charged by member owned clubs to non-members should be treated as exempt from VAT. In order to ensure Irish VAT legislation complies with the judgment, Section 71 of the Finance Act 2014 amended the VAT Consolidation Act 2010 (“VAT Act”). The amendments provide that VAT exemption shall apply to all golf income of member-owned clubs in respect of providing golf facilities with effect from 1 March 2015. The exemption will apply to green fees, competition fees and membership fees, including short term and corporate, which had been taxed at the second reduced rate of 9%.

Member-owned clubs whose golf income and membership fees will be exempt with effect from 1 March 2015 will no longer have an entitlement to a credit for VAT incurred on their inputs in relation to such income and input credits should be adjusted accordingly. Full guidance on the VAT treatment of member-owned clubs can be found in the VAT Treatment of Member-Owned Golf Clubs Leaflet.

2. Retrospective application of the European Court of Justice Decision

The decision of the CJEU, may be relied on by member-owned clubs for past VAT periods, subject to the 4-year time limit for making claims as set out in Section 99 of the VAT Act.

Clubs are expected to undertake a compliance review prior to submitting a repayment claim since any Revenue examination of a refund claim will include a review of all VAT obligations. Adjustments should be made for any previously claimed inputs that related to taxable golf income including capital expenditure that may require adjustment under the Capital Goods Scheme.

Claims for refund should not include any amounts that have been included on VAT invoices issued by the club (typically to VAT-registered customers such as tour operators). These VAT invoices will have formed the basis for VAT input credit entitlement by the customers.

3. Unjust Enrichment

The CJEU has consistently held that VAT is a tax on consumption and that there is no entitlement to repayment of VAT where the economic burden of the VAT has been borne by someone other than the taxable person, in this case member-owned clubs. The unjust enrichment provisions are set out in Section 100 of the VAT Act and provide that Revenue will refund VAT that was accounted for due to a mistaken assumption in the operation of the tax only in circumstances where the refund of overpaid amount or part thereof does not result in the unjust enrichment of the claimant. A key consideration in identifying and quantifying unjust enrichment is the degree to which the VAT was borne by the member-owner club as opposed to the consumer.

4. VAT Repayment Claims

In circumstances where a club is in a position to issue a refund of the VAT borne by the private consumer, a valid claim to repayment should be accompanied by an undertaking that the specified amount of the refund will be repaid to those who bore the VAT burden. In such circumstances, this portion of the claim will be repaid in full together with interest in accordance with Section 105 of the VAT Act.

Where a club is not in a position to identify the unregistered persons and has evidence that the full VAT burden was not borne by the consumer, Revenue proposes to examine each claim on a case by case basis to determine the appropriate level of refund, if any.

In this regard, a club is required to support its repayment claim by submitting the information listed below to their local Revenue District. This information should be readily available to the club's Finance Committee:

• The annual accounts for each year of claim;
• The annual subscription rate and joining fee, if applicable, for each year;
• The total number of members together with details of whether membership is open or closed;
• The visitor fee(s) charged for each year by category, for example, individual visitors, groups (societies, classics), competitions etc. Comprehensive information of the clubs’ pricing structure should be provided, including a breakdown by category of prices charged at high season, weekends, midweek, etc.
• Total visitor fee income by category for each year;
• The method(s) of apportionment used in each year and confirmation that the method was reviewed at year-end as required by the VAT Act.

Revenue will examine the information submitted by each club to establish the degree, if any, of unjust enrichment that would result if the VAT is repaid. If it is established that the golfer bore the entire VAT cost, or a proportion of the VAT cost, the repayment will be reduced accordingly. In such circumstances, the club will be advised that Revenue is invoking the unjust enrichment defence under Section 100 of the VAT Act in respect of the remainder of the claim. The club has the right to appeal Revenue’s decision to refuse to pay in whole or in part the refund claimed by the club.

Interest is payable on the VAT repaid in accordance with Section 105 of the VAT Act.

Further guidance in respect of the VAT repayment claims can be found in the VAT Manual Part 20-05.

5. Further Information

Enquiries regarding any issue contained in this eBrief should be addressed to the Revenue District responsible for the taxpayer's affairs. Contact details for all Revenue Districts can be found on the Contact Details Page.

01 April 2015