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HMRC internal manual

VAT Sport Manual

Key court cases dealing with the sporting exemption: Kennemer Golf and Country Club V Staatssecretaris van Financiën (Case C-174/00)

Kennemer was a Dutch ECJ case concerned with the meaning of “non-profit making” under Article 13A(1)(m) of the EC Sixth Directive (now Article 132(1)(m) of Directive 2006/112). The Dutch court ruled that the golf club was aiming to make a profit and thus did not qualify for exemption. The club appealed and the case was referred to the ECJ, which held that Article 13A(1)(m) should be interpreted as meaning that an organisation may be categorised as “non-profit-making” even if it systematically seeks to achieve surpluses which it then uses for the purposes of the provision of its services.



The Advocate General’s explained the test in his Opinion at paragraph 47, which read:


  1. When assessing those aims (whether an organisation is non-profit-making), therefore, it is necessary but not sufficient to look at the organisation’s express objects as set out in its statutes. It is also necessary however to examine whether the aim of making and distributing profit can be deduced from the way in which it operates in practice. And in that context it is not enough to look simply for an overt distribution of profits in the form of, say, a direct return on the investment represented by contributions to the organisation’s assets. Such distribution might also, at least in some circumstances, take the form of unusually high remuneration for employees, redeemable rights to increasingly valuable assets, the award of supply contracts to members, whether or not at prices higher than the market rate, or the organisation of sporting ‘competitions’ in which all the members won prizes. No doubt further methods of covert distribution can be devised.


 HMRC applies this guidance to the meaning to the term “non-profit making”. Officers should therefore consider whether this test is met in addition to the test of commercial influence in the Value Added Tax (Sport, Sports Competitions and Physical Education) Order 1999 (the ‘Sports Order’).