In a decision delivered last week by the Supreme Administrative Court of Finland, it ruled that ‘free’ meals given to staff at schools are not exempt from value-added tax (VAT), and must be levied.
A company in Finland is a provider of free school meals in school kitchens for school children in pre-primary and primary education. The school kitchens also prepare the meals for its own staff. The staff receives meal services as an employment benefit, and does not charge its staff for them for the meals. Essentially, the case falls on whether the meals are related to educational activities, or rather, merely the staff’s own consumption.
In case KHO:2023:78, the case came down to interpretation of the Directive 2006/112 on the Common Value Added Tax System (the VAT Directive), as well as the existing jurisprudence of the Court of Justice of the European Union.
The Supreme Administrative Court found that the business is a taxable person as intended by the VAT Directive, taking into account its business model. The staff’s free meal is private consumption. The meals for staff are therefore subject to VAT on own use of the services, corresponding to Article 26(1) of the VAT Directive. The company therefore must pay VAT on the provision of the ‘free’ meals.
The decision in question overturned the first instance decision of the Administrative Court of Helsinki in Case No. H5329/2021, which had ruled against the tax administration, finding that VAT was not owed for the meals in question.
More on the decision of the Supreme Administrative Court of Finland in
KHO:2023:78 can be accessed here.