On 18 January 2018, the European Court of Justice (ECJ) passed a judgement concerning the Ajax Amsterdam Football Club to apply the reduced VAT rate to an ancillary element of a single composite supply.

Case Summary

The tour of Stadion Amsterdam’s “World of Ajax” comprises of a tour of the stadium and the AFC Ajax museum. The stadium and the museum couldn’t be visited separately and were supplied as a single service. The price of admission to these elements were considered as a single service and a reduced VAT of 6% was applied in accordance with the supply of  cultural services through the visit to the museum.

On inspection, the tax authorities realised that entrance to the two places was sold as a single element for VAT purposes. If the guided tour (the principal element) and the museum visit (the ancillary element) were supplied separately, the standard VAT rate of 21% would apply on the guided tour and the VAT rate of 6% on the museum visit.

The Supreme Court of Netherlands asked the ECJ to validate if a single VAT rate can be applied on two different services, one of which, if supplied separately would be subjected to a standard VAT rate and the other to a reduced VAT rate.

The ECJ passed the judgment against Stadion Amsterdam. It confirmed that a reduced VAT rate cannot be applied to an ancillary element of a single supply, even if the prices of both the principal and the elementary supply can be identified separately.

Click here for the detailed proceedings of the court

How does this affect your business?

If you are an EU business and supply services comprising of  two elements as a single supply and if one of the elements is subject to a reduced VAT and another is subjected to the standard VAT rate, both elements must be charged with their respective VAT rates. Buyers in such circumstances may have paid more or less VAT than is due on these type of services and in which case maybe eligible for a VAT credit.