one the recent judgments of the Supreme Administrative Court should remove doubts about the appropriate VAT rate for the use of sports facilities such as gym or fitness club. The issue which has been controversial so far was, first of all, the way in which the expression "other services related to recreation – only for admission" was understood (item 186 Annex 3 to the VAT Act) on which preferential application was dependent 8% VAT rates.
So far, the tax authorities have been divided – so far, two essential positions on taxation of services such as the use of gyms:
- such services are subject to taxation at the basic VAT rate, given that the pass on access to a sports facility outside the entrance to which the preferential rate applies also gives the possibility to use certain equipment, which should be taxed at the rate 23% (cf. e.g. the individual interpretation of the Director of the Tax Chamber in Katowice on 30 May 2011, The signature. IBPP2/443-289/11/RSz);
- These services should be subject to a VAT rate of 8%, because the entry fee includes not only access to a specific facility, but in this fee the client is given the opportunity to use various types of sports equipment, which should not be recognized as a separate benefit (see e.g. the individual interpretation of the Director of the Tax Chamber in Warsaw from the day 30 November 2011, The signature. IPPP1/443-1374/11-2/ISZ).
It should be stressed that the question of preferential VAT rates for access to sports facilities has not previously been the subject of decisions by the Supreme Administrative Court. the possibility of this being more important to resolve the doubts in question may be the outcome of the Supreme Administrative Court.
The NSA in its judgment of 30 January 2014 (reference no. I FSK 311/13) considered that it could not be assumed that a rational legislator is creating a legal standard that does not cover any factual situation. At the same time, it is not possible to indicate a recreation service which would consist solely in the introduction, passive participation, without the active use of equipment located in this facility.
The Court of First Instance therefore interpreted the scope of the services provided by the gyms as follows:
- „Recreational services – only for admission" – in the case of admission cards, include both gym entry and use of equipment located there – should be taxed at a preferential rate of 8%,
- the term ‘entry only’ means that the services provided by the gym, which are not related to normal use of the gym, e.g. restaurant services on the premises of the club, the purchase of drinks, supplements or instructor services, are not subject to a reduced rate, should be taxed at the basic rate. 23%.
It is highly likely that the NSA judgment, affecting the harmonisation of the position of tax authorities, will end disputes over the admissibility of the preferential rate of use of sports facilities.