Since 1 January 1996, the green fees of member-owned golf clubs have been subject to VAT, where such turnover exceeds or is likely to exceed the registration threshold of £20,000 per annum. The fully commercial golf clubs have been taxable in respect of all their turnover since 1992.
There is no basis in EU VAT law whereby the fully commercial clubs — which are usually open to all comers — could be made exempt. Nor would there by any justification for doing so, as they are operating in the course of furtherance of business.
Nor is there any basis in EU VAT law whereby, because of open membership or equal status rules, the exemption afforded to the member-related activities could be extended to green fee turnover where such turnover is in direct competition with commercial enterprises. Such treatment could give rise to a tax-based distortion of competition and accordingly, under EU VAT law, would be open to challenge on that basis.
I should perhaps explain to the Deputy that the initiative in relation to the taxation of green fees of member-owned clubs was not taken as a revenue raising measure, but rather on grounds of equity following complaints and a threat of court action from the fully commercial clubs. EU VAT law, with which Irish law must comply, clearly provides that the exemption for nonprofit making clubs cannot apply if the purpose of the activity in question is to obtain additional income by providing services which are in direct competition with those provided by commercial enterprises which are liable to the tax.
I would like to point out that the new measures were very carefully targeted at the area where a distortion of competition had been demonstrated — the green fee type turnover. Membership subscriptions to member-owned clubs remain exempt and bar and restaurant receipts and other such turnover, which were already taxable, are not counted in calculating the £20,000 annual turnover threshold. Deductibility on inputs, denied to member-owned clubs up to now, are available in respect of their taxable activities and this should assist them in the future development of their facilities. Furthermore, all golf clubs in Ireland have the benefit of reduced rating of 12.5 per cent whereas the green fees of their counterparts in the UK, Spain and France attract VAT at the standard rates in those countries of 17.5 per cent, 16 per cent and 20.6 per cent respectively.