As a general rule, value added tax is charged at a tax rate of 25 per cent. For certain services within the area of sports, however, a reduced tax rate of 6 per cent is applied.
The case concerns a subscription service through which the users obtain access to pre-recorded, instructor-guided workout videos and broadcasts of workout sessions conducted by an instructor, which are played by the user in real time. The company providing the service applied for an advance ruling to learn whether the service is subject to the reduced tax rate for sporting facilities.
The Supreme Administrative Court concluded that the subscription service constitutes a single composite supply for value added tax purposes, which means that all components of the service must be subject to the reduced tax rate for that rate to be applicable.
The Value Added Tax Directive allows a reduced tax rate to be applied on the use of sporting facilities and the supply of sport or physical education, including when the lessons are livestreamed. According to the Supreme Administrative Court, the term “livestream” cannot be understood in any other way than that the recipient is to be able to access the broadcast at the same time as the class takes place, which entails that the company's supply as far as pre-recorded workout videos is not covered by the exemption from the standard tax rate.