Tax & Legal

In a most recently published decision, the Supreme Tax Court commented on the VAT situation regarding membership fees for non-profit sports clubs and held that they may be subject to VAT. However, it must be verified whether the sports club provides its members with a single service or several separate services, and whether this constitutes a tax-exempt transaction or one subject to VAT.

The Supreme Tax Court decided that expenses for a gym membership are generally not tax deductible as personal extraordinary and inevitable expenses. This also applies if the participation in a medically prescribed functional training program requires a membership in the gym.

Membership fees paid to a charitable organization that promotes cultural activities which mainly serve the furtherance of recreational and leisure activities are not deductible as special personal expenses for income tax purposes.

In its judgment of 18 December 2019 (XI R 21/18) published on 22 May 2020, the Supreme Tax Court ruled that the granting of a right to purchase goods at a reduced price (in the form of a "membership") constitutes an independent service for VAT purposes and not just a service ancillary to the subsequent sale of goods.