Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The proposal in the Finance Bill 2014 to exempt green fees in member-owned clubs from 1 January 2015 is necessary to ensure Irish VAT law complies with the recent decision of the European Court of Justice in the Bridport & West Dorset Golf Club Limited case, reference number C-495/12. Membership fees received from members of member-owned golf clubs had already been exempt from VAT and the ECJ judgment which has direct effect in the State found that green fees received from non-members should also benefit from a VAT exemption. Prior to the ECJ judgment, green fees charged by non-profit making organisations such as member-owned clubs to visitors had been liable to VAT at the 9% reduced rate of VAT.

Where a person or body supplies VAT exempt goods or services, this means that they do not charge VAT on these supplies and they are not entitled to claim input VAT on costs associated such supplies. Until now member-owned golf clubs would have made exempt supplies on membership fees and taxable supplies on green fees charged to non-members and, as a result, would have been entitled to partial VAT input deductibility on their business costs, including on capital development projects.

From 1 January 2015, however, member-owned golf clubs will be exempt from VAT on green fees and membership fees, and they will no longer have an entitlement to a credit for VAT incurred on their inputs in regard to green fees. This means the changes may have an Exchequer impact in the future and retrospectively. It is difficult to cost the impact to the Exchequer of the changes to the VAT treatment of golf fees because Ireland's simplified VAT return system means that the necessary detailed information to determine the cost of specific changes is not captured on VAT returns. However, as many golf clubs will have substantial overheads relating to capital developments, where up to now a proportion of the VAT on these costs was deductible, it is likely that the judgment will have a favourable impact on only a small number of clubs, retrospectively and in the future, and, as such, it is likely that any impact on the Exchequer will be negligible.

In addition, where VAT refunds arise, the Revenue Commissioners must consider whether the refund would unjustly enrich the club. The Revenue Commissioners has met with the Golfing Union of Ireland and has consulted with individual member-owned clubs to discuss concerns surrounding the issue of unjust enrichment. It will issue guidance on its position regarding unjust enrichment once the discussions are concluded.

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