Dutch law does not allow a VAT entrepreneur to deduct input tax through the adjustment procedure. According to the Court of Justice of the EU, this arrangement is not in conflict with EU law.
A VAT entrepreneur had bought ten plots of undeveloped land from a company. It was intended that these plots be developed for recreational purposes. That would be done by building mobile homes on it. On delivery, the company charged the entrepreneur VAT. The entrepreneur failed to deduct this VAT. Due to economic circumstances, the intended development of the plots never got off the ground. When the entrepreneur sold two lots back to the company, he did not charge and did not pay VAT. The tax authorities therefore imposed an additional assessment on him. Subsequently, the entrepreneur lodged an objection and appeal. In addition, he stated that the tax authorities had to reduce the additional assessment by the VAT paid on the delivery of the relevant parcels at the time of purchase. According to the man, this was possible with the help of the review scheme. The lower tax judges agreed with him.
Source Taxence
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