Arnhem-Leeuwarden Court of Appeal concludes that the Physiotherapy Hallmark Foundation is liable to corporate income tax.
A foundation is liable for corporation tax if and to the extent that a business is conducted. An enterprise is:
- a sustainable organisation of capital and labour;
- that through participation in economic activity;
- aims to make gains.
The tax authorities and the foundation already agree that there is a sustainable organisation of capital and labour. Therefore, the proceedings are about whether there is participation in economic activities and whether there is a profit motive.
Closed circle
The tax authorities have appealed against the ruling in which the District Court of Gelderland concluded that the foundation only performs activities within a closed circle and is therefore not liable for Vpb. The court ruled that the foundation's (potential) circle of participants is not so closed that there is no question of the foundation performing services in the ordinary course of business. The court ruled that the closed circle existed because accession was subject to specific conditions and limited to a certain group bound by specific characteristics. However, the court considered that the foundation's participant base has grown by hundreds of participants every year and the potential participant base is much larger still.
The court considered that, in addition, what is important is that member practices pay for obtaining and being allowed to use the hallmark. The quality mark brings the practices a financial advantage they would not otherwise realise. Through the hallmark, the foundation performs an intermediary role between the participants and health insurers. The foundation also fulfils such an intermediary role in the supply of healthcare data from the participating practices to and by a third party.
For-profit
The court also considers that there is a profit motive because the foundation actually realises surpluses for years in a row (in 2017 to 2019: €142,026, €263,523 and €284,938). This judgement is in line with established case law. So is the consideration that it is not important that the operating surpluses are spent entirely for the benefit of the participants. Nor does the fact that the articles of association state that the foundation does not aim to make a profit detract from the VpB liability.