VAT paid for football tickets or golf lessons is not tax deductible

Developing commercial relationships in environments different from the working center, such as sports or social clubs, is a common practice in business activities.

These clubs facilitate an atmosphere of wellbeing and efficiency to companies and professionals, which is necessary so that they can develop their commercial and personal relationships.

Notwithstanding recognizing this function, in a recent resolution, the Spanish Court (TEAC) does not allow the deduction of VAT quotes paid in the acquisition of football tickets or golf lessons addressed to current or potential customers whose loyalty and recruiting is of the interest of the company purchasing them.

✔ The Spanish Central Economic Administrative Court (TEAC), in its Resolution of 15 July 2019, has resolved on the disallowance of input VAT deduction paid for football tickets or golf lessons, based on the following grounds:

1. On the first place, the Court argues that such a restriction is compatible with EU regulations. Even if the acquisition of such services by a company may be based on business reasons, Spain can include this restriction as it was existing at the time it joined the EU.
2. Secondly, despite companies or professional individuals are VAT taxpayers allowed to deduct input VAT if they can justify the adequate link of the incurred expenses to their business activity, the purchase of golf lessons or football tickets cannot be considered as goods or services that qualify as part of the company’s usual business, as promotional products or samples or it cannot be proven that they are necessary for the business activities either.

As Sports or Social Clubs have a strong recreational character and despite they may have an infrastructure that may be used for entrepreneurial events or meetings, the input VAT quotes paid by companies to attend customers’, employees’ or third parties’ entertainments are not tax deductible from the output VAT.

✔ It is worth mentioning that, in the resolution’s case, the taxpayer does not make reference or prove any event or concrete meeting undertaken in the Club, which may permit the Spanish tax authorities ascertaining whether these are of an entrepreneurial nature and immediately serve for the business purposes as well as to move the business forward. It can, therefore, be assumed that the deduction of input VAT paid for meetings’ costs, considered on a stand – alone basis, with active or potential customers, undertaken in the Sports or Social Club should not be questioned by the Spanish tax authorities.