Commentary

V4.156 Exemption—trade union, professional and public interest bodies

Part V4 Exemption, zero-rating and reduced rates

V4.156 Exemption—trade union, professional and public interest bodies

Trade unions, etc.

V4.156 Exemption—trade union, professional and public interest bodies

EU legislation

The purpose of this exemption is set out in a commentary to the first report of the European Commission on what was to become the Sixth Directive. It states:

'…these organisations are in fact acting as the collective voice of their members and the subscriptions paid by the latter are for membership of a collective organisation and do not represent a consideration for services rendered. Such organisations should therefore fall outside the scope of VAT'.

It follows, and it has been held, that where the organisation in question does more than act as the collective voice of its members, eg by providing services to its members, it does not (or may not) fall within the exemption1.

The exemption extended to the subscription income of certain bodies is derived from Directive 2006/112/EC, art 132(1)(l), which exempts:

'the supply of services, and the supply of goods closely linked thereto, to their members in their common interest in return for a subscription fixed in accordance with their rules by non-profit-making organisations with aims of a political, trade-union , religious, patriotic, philanthropic or civic nature, provided that this exemption is not likely to cause distortion of competition.'

This article has direct effect. The European Court of Justice has defined 'an organisation with aims of a trade union nature' as 'an organisation whose main aim is to defend the collective interests of its members – whether they are workers, employers, independent professionals or traders carrying on

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