The case brought before the Court of First Instance in Brussels concerns an international association which was deducting VAT on all its expenses. Following a VAT control, the tax authorities rejected its right to deduct on the grounds that the association was in fact pursuing an objective of a trade union nature and that its activities were therefore exempt from VAT under Article 44, §2, 11° of the VAT Code. Consequently, it has no right to deduct.

The administration based its position by referring to the website where it was clearly stated that the objective of the association is to represent the industry before the governments as well as to the statutes where it is stated as an objective to give governments, international associations, etc. the possibility to confer with the industry, in order to deduce that it was an association of a trade union nature.

For its part, the association maintains that the objectives set out in its articles of association are in fact broader than those listed by the administration and that it has never represented its members before any public authority (moreover, it is not registered in the register of lobbyists).  It therefore sees itself more as a centre for meetings, exchanges and promotion of an economic sector.

The court points out that two conditions are required in order to be considered as a trade union body: the main objective must be the defence of the collective interests of the members AND the representation of those interests.

In the light of various documents (E-news, planning of conferences and their purely technical content, brochure concerning a technical seminar, arbitration documents, etc.) submitted by the association to the Tribunal enabling it to explain the exact nature of its activities, the court decides that the association does not in fact pursue any trade union objective at all and that, supposing it did pursue one, apart from the fact that it could not represent its members before the European bodies, not being recognised by the latter, it would not do so on a principal basis.

This is an interesting decision in more ways than one, which is at odds with the position of principle adopted by some VAT controls (particularly in Brussels) in terms of lobbying.

Neither the statutes nor the website of an association are in themselves sufficient to decide, without further investigation, that an international association pursues an objective of a trade union nature (lobbying). On the contrary, it is necessary to take into consideration all objective facts provided by the association in order to determine whether or not its activity consists mainly in defending the collective interests of its members and representing them.

Source: Brussels Court of First Instance of 28 February 2013.