CJEU rules in favour of Brockenhurst on education VAT exemption

In its decision on the Brockenhurst College case (C-699/15) the CJEU has ruled that

“Article 132(1)(i) of Council Directive 2006/112/EC of 28 November 2006 on the common system of VAT, must be interpreted as meaning that activities carried out in circumstances such as those at issue in the main proceedings, consisting in students of a higher education establishment supplying, for consideration and as part of their education, restaurant and entertainment services to third parties, may be regarded as supplies ‘closely related’ to the principal supply of education and accordingly be exempt from VAT, provided that those services are essential to the students’ education and that their basic purpose is not to obtain additional income for that establishment by carrying out transactions which are in direct competition with those of commercial enterprises liable for VAT, which it is for the national court to determine.”

This is a welcome decision, given that the Advocate General had expressed an opinion in favour of HMRC’s position in December 2016. CTG’s Technical Adviser, Graham Elliott, has published a commentary considering the background to the case and the wider implications for charities.