11.01.2024

Stop taxing the right to adult learning and education!

The national and regional interpretations of the European Union’s VAT Directive lead to financial uncertainties and problems for many ALE organisations in Europe. We demand a revision of the VAT Directive to exempt non-formal and non-commercial adult learning and education from VAT.

EAEA asked its members about the impact of European VAT regulations in 2020 and 2023. The general trends are unchanged: Where national and regional interpretation of the European VAT Directive argues that ALE is a “leisure-time activity” – and, therefore, not an activity in the public interest – national and regional legislation may require providers to pay value-added tax (VAT) on their revenues.

National legislators have different views on the interpretation of the European VAT Directive

Non-commercial educational activities remain exempt from VAT in most European countries, and ALE provided by public providers generally is exempt from VAT in all countries. Learning programmes that are understood as activation for the labour market also remain exempt from VAT.

However, some EU Member States, especially in German-speaking countries, have in the recent past repeatedly attempted to introduce taxation of providers of predominantly non-formal ALE, or aim to separate non-formal courses from formal programmes in taxation, even if they are offered by the same provider. The implementation of EU legislation is used as the most important argument for this, although national legislators have very different views on this from country to country.

However, an EAEA consultation with the European Commission in 2022 made it clear that the decision-making power here lies not with the EU, but at the national legislative level. Although the VAT Directive provides information on which education sectors and other areas should be taxed and how, it leaves the exact interpretation to the national level – for example, what is understood by educational activities in the public interest and whether ALE should be understood as a purely leisure activity or as part of the education spectrum. Depending on the interpretation, taxation is to be applied or not.

VAT on non-formal ALE leads to higher costs for courses and administration

The taxation of learning programmes has a strong financial impact on ALE providers. Depending on national tax legislation, providers have to pay between 16 and 27 per cent VAT on non-formal courses. This means a lower level of cost recovery for the providers, especially where costs are not covered by structural funding.

In a negative scenario, this could lead to higher course fees for learners – leading to a decrease in inclusion and accessibility of learning programmes. As providers want to avoid this scenario, they are forced to cut costs elsewhere to keep fees low for learners or keep courses free. In addition, VAT filing leads to higher administrative costs, especially if VAT has to be charged depending on the course content or even on the individual participants and their learning intentions (personal or professional). This, in turn, means higher personnel costs for providers.

Exempt non-formal and non-commercial adult learning and education from VAT liability!

The European Association for the Education of Adults (EAEA) urges EU policy-makers to encourage Member States to explicitly exclude non-formal and non-commercial adult learning and education from VAT liability. Legislation across all EU Member States needs to be adjusted to avoid tax competition between countries.

 

Text: Raffaela Kihrer

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