Justice understands that a football club does not pay VAT because it is a non-profit civil association

In the cause “Club Atlético Huracán Civil Association (TF 46028-I) c/General Tax Directorate without Direct Resource from External Organization”(File CAF 41046/2023 (1), Chamber III of the Federal Administrative Litigation Appeals Chamber issued a ruling on August 13, 2024 where it recognized that the Hurricane Club, Because it is a non-profit civil association, it is exempt from VAT. (2) and, therefore, you should not pay that tax.

Thus, the Federal Chamber revoked the ruling of the National Tax Court that had admitted the AFIP criterion according to which Huracán had no VAT exemption because that tax benefit only applied to income coming from a consideration for access. to “amateur” sports shows and, in this case, it had not been proven that they were that type of shows.

The Treasury’s claim

The AFIP claim covered the fiscal periods December 2008 to October 2013 within the framework of an ex officio determination procedure and summary instruction in which it established that Club Huracán had to pay the capital, its compensatory interest (3) and fines, position that was ratified by the National Tax Court based on different normative foundations such as, for example, that the Legislative Branch had delegated to the National Executive Branch the exercise of legislative powers (4) that included the power to create and eliminate exemptions or, that certain decrees had repealed the exemption on shows and meetings of an artistic, scientific, cultural, theatrical, singing, sporting nature, among many others, for the income that constitutes the consideration required for access.

The Huracán Club judicially appealed the ruling of the National Tax Court for interpreting that the exemption corresponded to it because it was a sports institution (subjective exemption), raised the unconstitutionality of the applied rules and cited precedents from the Supreme Court of Justice of the Nation ( 5) in which this tax benefit, of a subjective nature, was prioritized with respect to the taxed services that would fall within an objective exemption for the VAT law.

The House’s approach

For the Federal Chamber, the conflict focused on the scope of the tax on the income obtained by Club Huracán for the provision of sports entertainment services, in particular, professional soccer.

After clarifying that it was not obliged to consider all the proposals made by the Club but only those conducive to resolving the case and supporting a valid statement, the acting Chamber III made a detailed description of each and every one of the regulations involved, highlighting that qualified doctrine warned about “the absolute sloppiness and legal insecurity to which taxpayers have been unjustifiably subjected and which has caused the justice system, the AFIP itself, and the doctrine, to the taxpayers, to the officials of different levels and, in general, to all the actors linked to the matter” (6).

In turn, the Federal Chamber recalled that it is the rule of interpretation of laws to give full effect to the intention of the legislator and connect all of the precepts with the principles and guarantees of the National Constitution and, in cases that are not contemplated, The intelligence that favors harmony and the goals pursued must be chosen.

Regarding tax exemptions, he clarified that they must result from the letter of the law, from the intention of the legislator or from the necessary implication of the rules that establish them (7) that their interpretation must take into account the general context of the laws and the purposes that inform it.

For the acting Chamber, non-profit civil sports associations enjoy exemption from VAT and, in turn, amateur sports shows also enjoy exemption from VAT so that, in this case, Club Huracán, As a non-profit civil association, it is covered by the VAT exemption expressly provided for in the tax law.. Based on this premise, the ruling decided to revoke the ruling of the National Tax Court and imposed the costs by its order in all instances because the issue discussed is debatable and of singular complexity.

Final words

As a summary, the Chamber limits the benefit of exemption in favor of the Club based on the VAT law (2) that is, on the generic subjective exemption for being a non-profit civil association and considers it unnecessary to deal with the cedular taxation on “shows”. and sports meetings” provided for in Decree 493/01.

In this regard, it should be noted that the aforementioned cedular taxation turns out to be a complex issue, which was addressed in previous publications (8).

Finally, it is reported that recently, the AFIP filed an extraordinary federal appeal against the aforementioned ruling, an appeal granted by the Federal Chamber, so that the Supreme Court of Justice of the Nation will be the one who will define the issue under debate as, generally, happens in tax matters.

Thus, the question is raised about how the Supreme Court of the Nation, in its capacity as supreme guardian of the National Constitution, will define this enormous regulatory labyrinth where very old laws (9) and decrees questioned for their possible unconstitutionality coexist.

Lawyer. Tributary

Public accountant. Tributary

(1) The complete ruling is available at pjn.gov.ar

(2) Art.7 subsection h) point 6 of law 20,631 (current text).

(3) For compensatory interest, in a first administrative resolution, the AFIP had claimed $19,257,638.95 but, later, the AFIP itself issued another resolution that rectified that amount for $1,925,763.89.

(4) Through Law 25,414, later repealed by Law 25,556.

(5) CSJN, “Asociación Mutual Sancor v/AFIP –DGI s/action merely declaratory of law” (ruling of 4/14/15) and “Club 20 de Febrero C/afip” (ruling of 9/26/06).

(6) Marchevsky, Rubén A. “Value Added Tax. Comprehensive Analysis”, Ed. Errepar, Buenos Aires, 2006, page. 364.

(7) Among many others, Rulings: 297:142; 322:1699; 326:1320; 277:373; 292:129; and 302:973.

(8) Pena Ramón E., in “Sale of tickets for sports shows” (Tax News, Àmbito Financiero, 8/27/2019) and in “The controversial VAT situation of the sale of tickets for football matches, (Tax news, Ámbito Financiero, 6/14/2022).

(9) As, for example, subsection m) of Law 11,682, text according to Law 12,965