Sales, Use and International Tax Activity Update - January 2010

Greece Strikes Out with European Commission over VAT on Bowling

In Greece, the supply of bowling facilities to recreational bowlers constitutes a supply of services that are subject to the standard rate of VAT. However, the supply of those same facilities to members of clubs of the Hellenic Bowling Federation when used in the framework of organized sport is subject to a reduced VAT rate of 9%. Organized sport would be for competitions or for practice for such competitions.

In a reasoned opinion the European Commission is urging Greece to change this practice on the basis that it violates EU law. While it is permissible under EU VAT law to apply a reduced rate to a supply of sporting facilities the European Court of Justice has ruled that it is only permissible if it does not infringe on the principle of fiscal neutrality. That principal precludes treating similar goods and services differently for VAT purposes.

The position of the European Commission is that the use of sports facilities for the practice of bowling is the same service regardless of whether or not the bowler is affiliated with a federation. The same bowling facilities are used and bowling is still a sports activity promoting physical health and involving competition regardless of purpose. As a result, all bowling should be subject to a uniform VAT rate.

The European Commission may bring the matter to the Court of Justice should Greece fail to comply with the reasoned opinion.

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