Update: Alternative services of a gym during Corona lockdown subject to VAT?

There is no taxable service by a fitness studio operator if the gym is closed. Neither the continued payment of membership fees nor the replacement services offered by the operator is an exchange of services subject to VAT. With this decision, the Hamburg tax court deviates from an earlier view held by the Schleswig-Holstein tax court. Both proceedings are now pending before the Supreme Tax Court for final clarification.


The plaintiff's business, a gym, was closed due to the Corona measures from 17 March 2020 to 17 May 2020. During this time, many members continued to pay their membership fees. The plaintiff offered live online classes, a telephone hotline, and body scans during the closure period and announced that members would be reimbursed at the end of their membership for the time they could not work out at the plaintiff's gym. The plaintiff had "only" posted a notice on site and informed via social media about the alternate procedure on the free months during closing time. He assumed that he had not provided any taxable services during the closure period and in consequence should not be subject to any VAT. The tax office did not share this view.


The tax court of Hamburg (court of first instance) largely agreed with the plaintiff and held that only the payments made prior to the closure are subject to VAT.

In the opinion of the Tax Court, the exchange of taxable services was lacking for April in whole or in part during March and May. Due to the closure of the fitness studio in the months in question, the plaintiff - from the perspective of civil law - was unable to provide the services from 17 March 2020 to 17 May 2020. The fact that the members, despite the closure, had continued to pay their membership fees and were free to use the alternate services offered does not justify a different approach.

With respect to the months of April and May, no (VATable) advance payment for a monthly future service could be assumed, because such service had been impossible (in part) in May.

Finally, the VAT is also not owed pursuant to § 14c VAT Act (dealing with the incorrect or unauthorized disclosure of tax). However, to the extent that the closure was not foreseeable at the time of payment, the situation is different: The payment of the membership fees in the month of March is treated as an advance payment for a service yet to be provided and subject to VAT.

Update (23 August 2023)

In another case on this subject before the Tax Court of Lower Saxony the parties had agreed at the beginning of the closure to amend the respective membership in such a way that the operator of the fitness studios would provide his services (in part) following the regular term of the membership contract and that members would in return provide the consideration for this service already in advance during the closure period.

The tax court held that there is a complementing relationship between the fees paid by the members and the services to be provided later by the fitness studio operator- Therefore, the payments must be subject to VAT as advance payments according to Section 13 (1) no. 1 letter a sentence 4 VAT act which provides that VAT shall (also) be incurred “if the consideration or a part of the consideration is received prior to the supply or a part of the supply being carried out (…)”. - Source: Tax Court of Lower Saxony, decision of 23 May 2023 ( case ref. 5 K 59/22).


Hamburg Tax Court, decision of 16 February 2023 (6 K 239/21). Appeal pending before the Supreme Tax Court - case ref. XI R 5/23.

Note: The Schleswig-Holstein Tax Court ruled otherwise in a comparable case and dismissed the claim in full (decision of 16 November 2022 - case ref. 4 K 41/22). It has reached the following conclusion:

The voluntary payment of fees by members is still within the scope of the continuing (long-term) commitment from the past (here: „the membership”). The service of a fitness studio which was forced to close temporarily due to the Corona pandemic and which offered alternative substitute services is, from a purely VAT point of view, still connected and within the scope of services under the existing membership agreement. This includes, on the one hand, the services already received before the closure and, on the other hand, the replacement services provided during the closure period.

Hence, voluntary additional payments which are inherent and connected to the service and which exceed the amount owed under the contract are to be treated as a taxable amount for VAT. It is not important whether the remuneration corresponds to the value of the service received or not. The court draws a comparison to tips (for entrepreneurs, tipping is a remuneration which is subject to VAT).

The appeal is currently pending before the Supreme Tax Court (case ref. XI R 36/22).

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