A few years ago, the Belgian tax authorities published an administrative circular clarifying the scope of the exemption under Article 44, §2, 11° of the VAT Code (lobbying).

In accordance with European case law, the pursuit of objectives of a trade union nature must be the main objective of the association for the exemption to apply. There will therefore only be two possible cases:

• The main objective of the body is of a trade union nature? In this case, the VAT exemption will apply for all activities covered by the statutory membership fees, including activities of a promotional nature [e.g. promotion of an industry] which would be considered ancillary. The association will be treated as an exempt taxable person with no right of deduction.

• The main objective of the organisation is not of a trade union nature? In this case, taxation will apply to all activities covered by the statutory membership fees, including activities of a trade union nature which would be considered incidental. The association will be treated as an ordinary taxable person with a full right of deduction.

In other words, it is now the all-or-nothing rule: either the association is fully subject to VAT or it is fully exempt from tax for the services it provides in return for statutory membership fees. Only in exceptional situations (where it is impossible to determine the predominance of one objective over another) can the organisation be treated as a mixed taxable person with a partial right of deduction.

It should be noted that transactions carried out in favour of all or some of the members in return for a price distinct from the membership fee are in no way covered by the exemption, even if they are of a trade union nature.