Advocate General Kokott has published an opinion in the Brockenhurst College VAT case (C-699/15). Subsequently the CJEU has adopted the opposite position. Find out more here.

The case is a UK referral from the Court of Appeal asking whether supplies of restaurant and entertainment services made by an educational establishment to paying members of the public (who are not recipients of the principal supply of education) are ‘closely related’ to the provision of education and, therefore, exempt from VAT under EU law (Article 132(1)(i) of the VAT Directive), in circumstances where the making of those supplies is facilitated by the students (who are the recipients of the principal supply of education) in the course of their education and as an essential part of their education.

The AG concluded (in line with HMRC’s interpretation) that:

1. Closely related transactions within the meaning of Article 132(1) of the VAT Directive are independent supplies, the taxation of which also increases the cost of access to supplies that as such are exempt from tax. They do not include the supply of restaurant and entertainment services by an educational establishment to paying members of the public who are not recipients of the educational services that are exempt from tax.
2. For the differentiation it is relevant (and militates against the existence of the exemption) that the persons benefiting from the exemption contribute to what is provided to other consumers. It is also relevant that the third parties pay for their own consumption, that is to say, not for the provision of education to the students. Finally, it is also relevant that the supplies to the third parties — both from the perspective of the third parties and the students — pursue an independent objective (providing for third parties) that is pursued alongside the educational objective that continues to be exempt from tax.

Background

In the UK courts, the First-tier Tribunal determined that the supplies of restaurant services and entertainment services by the College to members of the public are exempt from VAT under Article 132(1)(i) of the VAT Directive as supplies of services closely related to education. On appeal by the Commissioners, the Upper Tribunal (Tax and Chancery Chamber) upheld the decision of the First-tier Tribunal. On appeal by the Commissioners to the Court of Appeal (England and Wales) (Civil Division) (United Kingdom), the Court of Appeal decided to stay the proceedings and refer questions to the Court of Justice for a preliminary ruling.