The Court of Amsterdam decided on 29 April 2004 in several more or less similar cases concerning an employer?s reimbursements of costs of his employees regarding the membership and participation in golf activities.
In one of the cases the employer deemed it commercially desirable that its employees participate in commercial relationship marketing through playing golf. In this respect the employer contributed in several ways in the costs of golf activities. The employer concluded sponsor agreements with a golf club, according which inter alia its general director and its four relation managers were entitled to play golf. In the presence of these persons, other persons could be invited without further costs (green fees) being due. The employees had to pay a yearly fee of NLG 1000 as compensation for their private use of the membership. Also the partners of the employees were entitled to play golf. The other cases were similar.
A Netherlands tax inspector held in each of the cases that the golf club membership of the employees and the rights for their partners to play golf were to be included in the employee’s taxable wages. The taxpayer went into appeal with the Court of Appeal.
The Court of Appeal of Amsterdam reasoned as follows: the exercise of a sport and the membership of a sport association belong in principle to each individuals ?private? activities. The circumstance that in this case the employer was keen on golf activities for relationship marketing purposes did according to the Court not change this. In this respect the Court considered inter alia that employees who were not interested in golf were not obliged to take part in these activities. These costs could according to the Court therefore not be classified as (tax-free reimbursable) costs made for the proper fulfilment of the employment.
In addition, the Court held that the costs could also not be considered as costs made for the proper fulfilment of the employments because they were not higher than the costs made by non-employees of the employer but by persons that were regarding income, wealth and family comparable with these employees.
The conclusion from the above decision (against which the employer did not appeal) must be that employers who intend to engage their employees in sporting activities for relationship marketing purposes need to pay proper attention to the wage tax consequences of the manner in which they structure their involvement in these activities.