Court Ruling: Padel Court Rentals are Exempt from VAT

Interesting news for padel and squash club operators! The Court of The Hague recently ruled that operators do not have to pay 9% VAT on court rentals to private players. According to the judge, renting out a court falls under the 'tax-exempt rental of real estate' rather than 'providing a sports facility'.

What was the case about? The operator of a squash and padel center disagreed with the Dutch Tax Authority (Belastingdienst). The operator argued that renting out a court is essentially the passive rental of real estate (which is VAT-exempt). However, the Tax Authority argued that the club was offering a 'sports service', which is subject to the reduced VAT rate of 9%.

Why did the court side with the padel club? The judge ruled in favor of the operator based on the following key points:

  • Exclusive Right: When a player books a court, they get the exclusive right to use that specific space for a set amount of time, just like renting a property. Other players are excluded from using it during that slot.

  • Passive Rental: There is no active supervision or guidance from staff on the courts. The bar staff opens the facility but does not interfere with the sports activities.

  • Secondary Facilities: The presence of changing rooms, showers, and toilets does not turn the rental into an active 'sports service'. At its core, the primary transaction is simply providing floor space.

A significant legal victory for the entrepreneur involved, resulting in a substantial increase in their VAT refund!