§ Lord Smith of Leighasked Her Majesty's Government:
Why charitable cultural organisations are now required to change established governance arrangements to retain their exemption from VAT. [HL23]
§ The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey)The VAT exemption for cultural services applies to those bodies which are "managed and administered on an essentially voluntary basis by persons who have no direct or indirect financial interest in its activities". Following the 2002 judgment of the European Court of Justice (ECJ) in the case of the Zoological Society of London, VAT exemption now applies to an increased number of cultural organisations. Any organisation that was previously eligible for the exemption remains eligible as a result of the ECJ's decision without changing its governance arrangements.