VAT'S IMPORTANT - NEWSLETTER 2023 - 01
NEWSLETTER 2023 - 01
VATable – or exempt from VAT – this is the question!
The Federal Administrative Court defines educational services in its ruling
of April 19, 2023 (A-3144/2021)
WHAT IS IT ABOUT?
In the field of consulting, the border between VATable and exempt services can be fluid -especially in the area of educational supplies. Only recently, the Federal Administrative Court was asked about this issue. The complainant offered spiritual-religious courses and training courses in the field of Scientology. He was of the opinion that these were educational services which were exempt from Swiss VAT - the Federal Tax Administration saw it differently.
DEFINITION OF EDUCATIONAL SERVICES PERFORMED
First of all, in its ruling of April 19, 2023 (A-3144/2021), the Federal Administrative Court (FAC) defines what is meant by a course that falls under the exemption of the VAT Act due to educational services: the administrative practice defines this as a "continuous series of lessons that enable a temporary, school-like training in a subject or a group of subjects, aimed at the achievement of a defined learning objective. The duration of the course is irrelevant. A course can be a sequence of lessons lasting one or more hours, half a day, one or more days, or extending over weeks, months or years. Trial and taster lessons also fall under this tax exemption.
The FAC then goes into each of the courses offered by the complainant and evaluates whether these are educational services or taxable services from a VAT perspective. In some cases, the FAC confirms that the individual courses contain educational elements and that they are exempt from VAT.
NON EDUCATIONAL SERVICES
However, in the case of other courses offered, the FAC also recognizes that the imparting of knowledge is not necessarily in the foreground. Rather, the courses are aimed at convincing the course participants of the worldview of Scientology. The participants are even obligated, under threat of punishment, to apply the "technology" of Scientology correctly and word-for-word, whereby their own interpretations and deviations are forbidden. The participants of certain courses are thus to be influenced or put under pressure in such a way that they apply the "pure doctrine" and also demand this from third parties (e.g. other course participants) or monitor the application of this "pure doctrine" on the part of third parties. The teaching of Hubbard is to be lived by the course participants, without them being allowed to critically deal with it (with themselves or with third parties). In the case of such course content, the educational element is negated by the Federal Administrative Court.
CONCLUSION
Based on the above, it is crucial to understand the actually supply. In the past years, the court decided on many similar cases where courses are offered. Due to the grey zone, we highly recommend discussing this with the SFTA upfront via a written ruling request. This may minimize risks and interest payments.
If you have any questions, please do not hesitate to contact us.
Your terraVAT team is happy to assist.
Sabrina Frey Florian Hanslik
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