New Ruling: Tax Exemption for Non-Profit Sports Organizations Does Not Apply to Professional Football Events
In a recent ruling, the Austrian Federal Fiscal Court (BFG) has clarified that the tax exemption for non-profit organizations in the field of physical sports does not extend to the sale of tickets for professional football events. This decision has significant implications for football clubs and fans alike, as it means that such ticket sales will now be subject to value-added tax (VAT).
The ruling, dated August 24, 2023, came in response to a case involving a football club that had claimed a tax exemption for the sale of tickets to its matches. The club argued that it should be considered a non-profit organization and, therefore, eligible for the tax exemption under § 6 (1) Z 14 UStG (Austrian VAT Act).
However, the BFG concluded that the promotion of economic interest is the predominant factor in professional football events. Unlike other physical sports, professional football matches are characterized by the significant commercialization and financial interests involved. As a result, the court determined that the tax exemption for non-profit sports organizations does not apply in this case.
This ruling is based on the interpretation of the relevant provisions of the Austrian Federal Fiscal Code (BAO) and the Austrian VAT Act. According to §§ 34 ff BAO, non-profit organizations are eligible for tax exemptions if their activities serve a specific statutory purpose. In the case of physical sports organizations, this purpose is typically the practice or promotion of physical sports.
However, the BFG emphasized that the eligibility for tax exemption depends on the predominant purpose of the organization’s activities. In the case of professional football events, the court found that the promotion of economic interest, such as generating revenue from ticket sales, sponsorship deals, and broadcasting rights, outweighs the practice or promotion of physical sports.
This ruling has significant implications for football clubs in Austria, as they will now have to account for VAT on ticket sales. It is expected that this additional tax burden will have financial consequences for clubs, potentially impacting their budgets and ability to invest in player transfers, infrastructure improvements, and youth development programs.
Furthermore, the ruling also affects football fans, who will now have to pay higher prices for tickets due to the inclusion of VAT. This could potentially discourage some fans from attending matches, leading to a decline in attendance and a less vibrant atmosphere in stadiums.
It is worth noting that this ruling only applies to professional football events and not to other physical sports. Non-profit organizations in other sports, such as athletics, swimming, or tennis, may still be eligible for the tax exemption if their activities primarily serve the practice or promotion of physical sports.
In conclusion, the recent ruling by the Austrian Federal Fiscal Court clarifies that the tax exemption for non-profit sports organizations does not apply to the sale of tickets for professional football events. The court determined that the promotion of economic interest is predominant in such events, and therefore, they are not eligible for the tax exemption under Austrian tax law. This ruling has significant implications for football clubs and fans, as it will result in additional tax burdens and potentially higher ticket prices.
