In November last year, we reported in our article No VAT deduction for fundraisers that a foundation which raised funds for food banks was not entitled to a VAT deduction. In the appeal against the ruling in which the Gelderland District Court had so decided, the Arnhem-Leeuwarden Court of Appeal On 3 May, it was decided that a full VAT deduction could be claimed.
Food banks
The case concerns the draft “One for food“. Under this scheme, restaurant diners donate €1 per place setting to food banks. This donation must go entirely to the food banks. The foundation’s costs are therefore covered by the contributions paid by the restaurants for taking part in the scheme. In exchange for these contributions, the restaurants receive publicity packages and are granted the right to use the scheme’s name and logo to advertise their business. The Court considers it undisputed that the foundation is a VAT-registered business for the purposes of these advertising activities.
Actual work carried out
Unlike the District Court, the Court of Appeal concludes that the foundation can deduct all input VAT because its actual activities consist of recruiting restaurants and launching and running the campaign. The fundraising aspects for the food banks are merely a consequence of this, as is the transfer of the donations. The costs incurred by the foundation – comprising consultancy fees for drawing up the business case, designing and producing the materials, and hiring two temporary staff to visit the restaurants, support the conclusion that the foundation’s actual activities involve recruiting restaurants and launching the campaign.
There is no evidence to suggest that the foundation and its affiliated food banks do anything more than provide information about what the campaign involves.
It is the foundation’s actual activities that are decisive, not the fact that its actual (and statutory) purpose is to collect donations for food banks.