On 15 June 2017, the European Court of Justice (ECJ) published the opinion of Advocate General Szpunar in the English Bridge Union (EBU) Case (C-90/16). The case is based on a referral for preliminary ruling by the British Upper Tribunal to the ECJ on the question whether contract or duplicate bridge is a sport within article 132(1) (m) of the Principal VAT Directive. The Upper Tribunal further wanted to know if an activity needed to have a significant physical element to count as a sport for this directive.
The opinion initially clarifies that the exemptions listed in the VAT directive are not optional: If conditions are met, then Member States are obliged to exempt transactions from VAT. Although there have been previous cases regarding VAT exemptions and sport, and even the combination of the two, there is currently no Union wide all-encompassing definition of sport which would apply throughout the EU for every act of law. Therefore, the Advocate General looked at the wording, system, context/objectives and history of the VAT Directive to decide on an interpretation.
On the basis of these factors, he argues that the VAT Directive does not imply that “sport necessitates a physical element”. The rationale behind the exemption stems from Article 165 TFEU, which states that the Union is “to contribute to the promotion of European sporting issues, while taking account of the specific nature of sport”. Since there is no uniform definition of sport in EU legislation, the question at hand is not whether sport according to some definition needs to have a physical component, but specifically, whether the activities benefitting from the VAT exemption under the term ‘sport’ need to include an element of physical effort or exertion. The international status granted by the IOC to certain mental sports or activities without a physical element implies a certain acceptance by the public for seeing such activities as sports.
Subsequently, the opinion arrives at a list of prerequisites for a sport in the context of the VAT directive:
A sport requires a certain effort to overcome a challenge or an obstacle (and are thus not purely recreational);
The overcoming of these challenges trains a certain physical or mental skill and thereby yields benefits for the physical or mental wellbeing of the persons engaging in the sport;
Such activities are usually practised not solely in a purely commercial context:
(Local) public perception or international recognition serve as an indication pointing to the existence of a ‘sport’. There is a cultural component to this, as some sports are regional or more prevalent in certain countries.
Following this interpretation, the Advocate General finally advises the ECJ to answer the British court’s question in the sense that “among the characteristics an activity must exhibit in order for it to be a ‘sport’ within the meaning of Article 132(1)(m) of […]the ‘VAT Directive’ a physical element is not necessary.” and that Duplicate contract bridge is a sport regarding the exemption in the VAT Directive.
A longer analysis of the General Advocate’s opinion can be found on the EOC EU Office intranet. A date for the delivery of the ECJ’s preliminary ruling has not been defined yet.