Dáil Éireann debate -
Wednesday, 23 Feb 1994

Vol. 439 No. 3

Written Answers. - VAT on Golf Facilities.

Peter Barry

Question:

61 Mr. Barry asked the Minister for Finance the proposals, if any, he has to abolish VAT imposed on proprietor-owned golf courses whether the imposition of VAT on these courses puts them at a disadvantage to member courses; whether the extra charge is a deterrent to visitors who would, as a result, have to pay more in green fees on courses which were built to accommodate them; and if he will make a statement on the matter.

Minister for Finance (Mr. B. Ahern)

The position is that, under EU VAT law, which, in turn, governs Irish VAT law, golf facilities which are being provided in the course or furtherance of business are properly liable to VAT and there can be no question of exempting them from the tax; on the other hand, golf clubs established on a non-profit making basis, for the benefit of their members, can be exempted from VAT.

The provision, on a commercial basis, of facilities for taking part in sporting activities became liable to VAT at the 12.5 per cent from 1 July 1992. Prior to that date, the position was quite confused. The provision of certain sporting facilities, including golf courses, has been treated as exempt, while the standard rate applied in other cases. However, all sporting facilities provided as part of a hotel operation were liable to VAT at 10 per cent.

This treatment of commercial entities could not have been allowed to continue, as it was contrary to EU rules and created distortions of competition between sporting facilities provided by hotels which were taxable and similar facilities provided by other commercial operators which were exempt. The distortion had become very pronounced because of the trends in the commercial sector over the last few years.

As regards the question of proprietor-owned clubs being at a disadvantage as compared to member-owned clubs, I wish to advise the Deputy that this issue was considered recently by the Government on foot of a study undertaken by my Department in conjunction with the Revenue Commissioners, following representations from the proprietor-owned clubs. While I accept that there is, inevitably, some competition between taxable and non-taxable entities, I am not convinced that, as matters stand, distortion of competition arises between them to a sufficient extent or on a wide enough scale to warrant changing the law.

It should be noted that VAT-registered golf courses are entitled to recover, in full, the VAT borne on the development and maintenance of their facilities and on-going running costs. Exempt golf facilities are not. This situation should be reflected in the membership and green fees charged: while the commercial operations must charge 12.5 per cent VAT, the exempt clubs have to set their fees at a level which, inter alia, takes account of overheads including the irrecoverable input VAT. Thus, VAT is reflected in the fees charged by both types of clubs, albeit in different ways.

Finally, I would point out that application of the reduced rate, combined with deductibility, should ensure that any price differences, which might arise because of differential taxable status in relation to services provided, are kept to a minimum. Moreover, within the golf sector, the prices charged for services vary substantially. Accordingly, it is difficult to demonstrate that, in practice, taxable status makes any significant difference to the prices charged.