Typing courses and licences: taxed or exempt?

The District Court of Zeeland-West-Brabant ruled on whether providing typing courses and granting licences to the accompanying software are taxable or exempt supplies.

The facts

A business provided typing courses and granted licences to the software it had developed for them. The courses were offered both in the classroom and online, in both cases with the option of tuition from a teacher. They were aimed mainly at primary school pupils, but adults and companies could also take them.

In 2006 the inspector took the view that the courses were exempt. In 2019 he indicated that he no longer shared that view and that the courses would be taxed from 2020.

The business challenged this: in its view these are exempt vocational training and exempt primary or general education. The inspector sees no direct link between the course and a trade or occupation to be practised, or with functioning in a future working environment, and therefore no vocational training. Nor, in his view, is there exempt primary education, because the business is not a body governed by public law and is not recognised as an educational institution. It is not general education either, because typing is not a core objective of the curriculum and does not form part of the regular programme.

The education exemption

The exemption covers education regulated by law and education designated by order in council.

Education regulated by law is education covered by one of the Dutch education acts, from primary through to higher education, including vocational training by publicly funded institutions such as universities and regional training centres.

Designated education comprises:

• vocational training by registered institutes or by publicly funded institutions
• general education derived from publicly funded exempt education, other than education of a leisure character or aimed at acquiring skills for one's personal life
• tuition in dance, music, drama and visual arts for people under 21
• tutoring and exam preparation connected with education regulated by law
• administering examinations concluding education regulated by law

The State Secretary's decree provides that any form of education that trains for a specific occupation, trade or particular position, or that confers a particular ability to carry it out, qualifies as vocational training, regardless of the age and educational level of those attending. Education directly connected with a trade or occupation, and education aimed at acquiring or maintaining knowledge for professional purposes, is also covered. Alongside specific vocational training and retraining, courses aimed at how people function in a current or future working environment also qualify.

The court's ruling

Typing courses cannot in general be treated as exempt vocational training: the direct link with a trade or occupation is missing. The courses are generally not aimed at functioning in a working environment. Being able to type is a basic skill useful to anyone using a computer, and computers are used not only for work but also privately, for instance for school and study.

The court held that 21% VAT is due on the courses and the licences. The courses for primary school pupils are not exempt, and nor are courses for others where the private element predominates.

The exemption can apply where there is vocational training. That is the case where companies take the courses, and where adults take them directly for themselves. In the latter case it must be shown case by case that this amounts to vocational training.