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The Netherlands: Was Payment to UK football club for 2002 Friendly Match in the Netherlands subject to Netherlands wage tax?

In 2002 a Netherlands professional football club made a payment of EUR 133,000 to a UK football club for a friendly match in the Netherlands. Apparently it was specified that EUR 2,720 was meant to cover costs made and no withholding of wage tax took place. The UK football club paid its players their salary, but did not pay any part of the EUR 133,000 to its players. Later, the Netherlands tax authorities imposed a wage tax re-assessment on the Netherlands football club. The club went into appeal. The Court of First Instance held that the Netherlands obligation to withhold wage tax on payments to foreign groups which are not being paid through to the members of the group, is in principle in conflict with the freedom of services provided for by Article 49 of the EC Treaty. Similar payments to domestic groups would not have been subject to wage tax, but would be taking into account for the levying of corporate income tax on the group. The Court of Second Instance disagreed with the Court of First Instance and held that the withholding of wage tax was a proportionate means for taxing this income of a foreign group. The taxpayer then went into appeal at the level of the Supreme Court. On 25 September 2009, the Advice of the Advocate-General to the Netherlands Supreme Court of 6 August 2009 has been published. The Advocate-General presented a thorough analysis of the domestic legislation and literature on the issues. After analysing the Scorpio, Turpeinen, Truck Center and Amurta decisions of the European Court of Justice, he concluded that prejudicial questions be asked to the European Court of Justice. Now the decision of the Supreme Court is to be awaited. If the Supreme Court decides to follow the advice, it will have to formulate the questions itself, the Advocate-General did not already supply proposed questions. Last but not least, as of 1 January 2007 the Netherlands legislator has for most instances abolished the obligation to withhold wage tax on payments to foreign groups.
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The editors of  the Journal Sports Law & Taxation are Professor Ian Blackshaw and Dr Rijkele Betten, with specialist contributions from the world's leading practitioners and academics in the sports law and taxation fields.

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Dr. Rijkele Betten

Consulting editor
Prof. Dr. Ian S. Blackshaw

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Prof. Guglielmo Maisto
Maisto e Associati, Milano

Dr. Dick Molenaar
All Arts Tax Advisors, Rotterdam

 

Mr. Kevin Offer
Hardwick & Morris LLP, London

Mr. Mario Tenore
Maisto e Associati, Milano

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