The Scientology Church Amsterdam can not be considered to be 'an institute for the common good' as intended in the income tax law merely because the church claims to be such an institute. Therefore, the revenue service does not have to consider payments to the sect - be they for courses or as donations - to be tax deductible, the more because Scientology uses 'more or less commercial tariffs.'
This High Court verdit comes as a big hit to the sect. Potential believers as well as full-fledged Scientologist from now on will think twice before they pay tens of thousands of Euros for Scientology courses.
The High Court last week nullified a verdict made by the tax office of the Amsterdam court in January last year. This verdict dealt with the 1998 income tax statement filed by a scientologist a few years ago. He deducted a number of smaller donations (totaling nearly 2.000 guilders) to Scientology.
Inspectors of the revenue service in Amsterdam, business department, refused to accept the gifts as deductable, after the revenue service had researched the 'factual activities of the Scientology Church.' Article 47 of the income tax law states that gifts to, among other things, 'church-' and/or ' institutes intending to serve the common good' are deductible. Whether Scientology may be considered a 'church' is another issue, but it clearly is not an institute for the common good - rather a regular commercial venture.
Even the height of the rates for courses demonstrates a commercial intent, the tax office said to Scientology: 'The rates vary from 125 guilders for a course for beginners, via rates of 6500 guilders for advanced and finally to 9800 guilders for courses for more advanced students. In addition, the way in which Scientology recruits students can also be considered as commercial.'
Of main importance, however - according to the letter from inspection to Scientology - was the fact that the 'intent and content' of the courses is aimed mainly at taking away 'personal problems,' and therefore 'individual' and for 'personal benefit.' 'From factual research it therefore follows that Scientology is an institute not for the common good, but serving personal benefit.' The deduction of nearly 2.000 guilders was denied.
With the help of Scientology, the scientologist in question appealed the decision. They argued that the sect certainly does serve the common good, if only since Scientology in the Netherlands alone was said to have 'ninethousand parishioners.' According to recent scientology apostates, however, the 'church' until recently counted only about 150 active members.
Scientology, pointing at its yearly statement, also denied that it was a commercial institute: yes, the 'church' in 1993 had 1.8 million guilders in income, but the accumulated loss of previous years by 1993 totalled 3.9 million - and those numbers have not improved since then. Whether these losses were absorbed by the richer departmentsin the U.S. and in Denmark was not made clear during the procedure.
The revenue service eventually declared, on January 11 last year, that 'in principle it can be accepted' that the 'activities' of Scientology ' for at least 50 percent serve the common good,' and that the sect therefore should be considered to be 'an institute for the common good' in according with the law. "The fact that Scientology apparently actively recruits parishioners/members and employs more or less commercial rates for its courses, does not lead to another conclusion.'
The court also determined that the burden of proof in this issue was with the inspection: it was not the case that Scientology had to proof it 'served the common good for at least fifty percent,' said the court. Inspection had to proof that this was not the case.
The High Court has now wiped that verdict off the table. The court could determine whether Scientology possibly was a 'church or spiritual institute,' according to the High Court, but it could 'not conclude that it could be accepted that the Scientology's activities serve the good good for at least 50 percent.' Moreover, the Court determined, does the burden of proof not lie with the inspection, but with Scientology: the 'church' must proof that she mainly serves the common good.
The Court is also of the opinion that the lower court had 'not properly motivated its rejection' of the arguments employed by the revenue service, which in its investigation had determined that the sect mainly turns around hugely-expensive courses and other commercial activities.
The High Court finally refers the case for further treatment to the court in The Hague. The scientologist involved and the Scientology church now have four weeks time to proof to the court in The Hague that the sect indeed serves the common good. Considering the reputatation of the 'church' in this area, this will no doubt lead to truckloads of notarized and other official statements from scientologists which should serve to proof that Scientology certainly is not interested in the money, but rather in the common good of all mankind. After that, the revenue service can respond.
That said, it is not the first time that a court rejects the deductibility of donations to Scientology. In the mid-eighties a scientologist went to the revenue office of the court in The Hage (the same court that now gets to review a similar case), after the tax inspection had rejected a deduction of 15.000 guilders that the man had spent on Scientology courses. At the time, the sect also claimed to serve the common good. The court judged that Scientology did not meet that 'description,' but that 'instead the statement and documents showed that Scientology's activities consist mainly of presenting paid courses.' The gift therefore was not accepted as deductible.
At the moment, Scientology Netherlands has problems on many fronts. In recent months, sixty of the estimated 150 active members of the sect, with offices at Amsterdam's Nieuwezijds Voorburgwal, have turned their backs on the 'church.' They consider the sect to be too strict and far too expensive.