Supreme Court: courses for older learners are not exempt lectures

The Dutch Supreme Court construes the concept of a lecture very strictly: do more than deliver a text, for instance hand out course material, and the exemption falls away. We are not persuaded.

Several Dutch institutions offer higher education for older learners, academic courses for people aged 50 and over. Until 1 September 2016 these were offered without VAT. The Dutch Tax Administration then took the national position that institutions must charge 21% VAT from that date, forcing prices up considerably.

Three institutions challenged that position in court. The Supreme Court has now ruled in two of those cases. In one of them we acted for the institution.

The proceedings

In that case the Court of Appeal in Amsterdam held that providing these courses is exempt under the VAT exemption for lectures and similar services. The Court of Appeal in Arnhem-Leeuwarden reached the same conclusion in the other case. The State Secretary for Finance appealed against both. At the end of 2022 Advocate General Ettema advised the Supreme Court to uphold those rulings.

The Supreme Court did not follow that advice. In its view the concept of a lecture must be construed strictly. Like the Amsterdam court, it holds that a lecture consists of delivering a text to an audience. Unlike that court, however, it considers that there is no longer a lecture once more than that is done, for instance handing out course material or providing an opportunity for discussion. That applies even where those additional elements are ancillary, meaning that for the average participant they are not an end in themselves. Because it is established that course material is provided on these courses, the exemption falls away. The Supreme Court also holds that neither the education exemption nor the reduced rate of 9% for admission to lectures applies.

Our reservations

For institutions offering these courses the decision is disappointing: the courses remain subject to 21% VAT, and reversing the sharp price increase of 2016 is therefore impossible.

The reasoning does not persuade us. Where providing course material is an ancillary supply, it is not viewed separately for VAT: it is subsumed into the principal supply. That a supply lacking independent significance for the average customer should nevertheless take the principal supply outside the exemption, changing its VAT character, strikes us as illogical.

The Supreme Court also explains only what a lecture is, while the exemption covers lectures and similar services. What falls into that second category it leaves open. It looks as though the Court's very strict reading is aimed above all at preventing course-based teaching that falls outside the education exemption from escaping VAT through the lecture exemption instead.