Magazine article European Social Policy

Finance : Are Private School Lessons of General Interest?

Magazine article European Social Policy

Finance : Are Private School Lessons of General Interest?

Article excerpt

In a judgement delivered on 14 June 2007 in relation to the application of VAT rules, the Court of Justice of the EC legitimated the concept of private tuition in the same way as traditional teaching (Werner Haderer versus Finanzamt Wilmersdorf, Case C 445/05).

PRIVATE LESSONS

Mr Haderer had given remedial courses in a Folk High School ( Volkshochschule') as well as courses in ceramics and pottery in another Folk High School and a centre for parents ( Elternzentrum'). Both teaching activities regularly came to more than 30 hours per week. Contracts were agreed every six months with the Berlin State for a six-month period. But they comprised clauses according to which they did not constitute "work contracts" under German labour law. And nothing in their practice made it possible to qualify them as such: Mr Haderer's basic fees, paid by the Berlin State, were calculated on an hourly basis. Social security contributions, insurances and taxes were not recouped from his fees. He had no right to keep the fees in the event that he could not come to teach and he bore the risk of their loss if the courses were cancelled, even if the reason for this cancellation was a lack of participants.

The German tax department thus subjected the interested party to VAT. Before the Court, the Italian government supported. But the European Commission, supported by the Greek government, declared itself in favour of him being made exempt.

SUBJECT TO VAT UNDER 3 CONDITIONS

The court has not entirely settled the issue and prefers to give a position of principle. "The activities of an individual with independent worker status, giving remedial lessons in school, as well as courses in ceramics and pottery in adult teaching centres, can only benefit from VAT exoneration if 1. such activities constitute lessons given by a teache; 2. of his own accord and under his responsibility; and 3. …

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