There is a new (emergency) cry for widening of the volunteer scheme. This time from the National Sports Council. This is a body established in 2016, whose mission is to look at how to increase the return and impact of major sporting events. Its initial conclusions are set out in a Letter opinion. A very readable report. Certainly also for organisers of smaller events. Actually for all directors of foundations and associations. Besides the volunteer scheme, the financing of events and problems surrounding VAT are also discussed.
Volunteer scheme
The importance of the volunteer scheme is very high for many cultural and social organisations (including sports). But those organisations need to pay close attention to the tight rules of the volunteer scheme. If they do not, they run the risk that the tax authorities will impose additional payroll tax and contributions. We describe the rules of the volunteer scheme in our note Volunteer.
The tight application of these rules is demonstrated by the examples cited in the Letter Opinion. For example, during the 2014 Hockey World Cup in The Hague, the Tax Authority was present daily to question volunteers. In this way, the Inland Revenue checked whether the volunteers really did not receive any allowances.
And during the European Women's Football Championship, volunteers were required to collect their equipment at a central distribution point every day and return it there. This was to prevent the clothing from not being considered tax-free workwear to be issued.
Widening
The National Sports Council calls on the Cabinet to remove the bottlenecks experienced by organisers of major sports events with the volunteer scheme. A uniform policy should also be adopted across the country. The latter could be achieved by making one office of the Tax Authority responsible for taxation around major sports events for the whole country.
As solutions to the bottlenecks, the NLSport Council suggests:
- flexibilise the monthly amount of the volunteer scheme (€150) to a quarterly amount (€450);
- view the provisions in kind as necessary benefits in kind (this includes necessary work clothes, meals, refreshments and the like);
- do not value benefits in kind at retail value, but at purchase value.
The Rutte III Cabinet's coalition agreement provides for one relaxation of the volunteer scheme. That is the increase of the maximum annual amount from €1,500 to €1,700.
VAT
In the context of VAT, when organising (large) sports events, the taxability of subsidies and sponsor contributions obviously comes into play. Particularly with subsidies, there is the risk that the Tax Authorities (afterwards) consider that VAT has to be paid on them. And it turns out that this is handled differently by tax offices around the country.
Sponsorship is often cast in the form of barter agreements (exchanging services). Then invoices have to be sent back and forth. Each of those invoices may or may not include VAT. Moreover, a common point of discussion is what value should be assigned to the individual performances.
How should sponsorship packages be handled? They often include a range of services. Should these be seen as a single supply for VAT purposes? Or can they be split into separate supplies, some of which may be subject to the reduced VAT rate?
Double VAT is regularly levied when catering costs are recharged. The NLSportraad advocates allowing VAT deduction from the event organiser, provided the costs are visibly recharged, stating that this recharged VAT is not deductible.
Funding
The NLSport Council also makes recommendations regarding the financing of major sports events. Fiscal measures should make it (more) interesting for individuals to finance sports events. For example, by considering non-profit events as ANBIs. Then donations are not subject to gift tax and deductions are possible under income tax.