On November 11, 2022, the Supreme Court ruled in an important case about a bank’s right to deduct VAT. This bank wanted to determine the VAT deduction right on mixed costs on the basis of a business economic analysis of the ‘profit and loss’ (‘P&L’) per product. It was of the opinion that this VAT deduction method constitutes an ‘actual use method’ that is permitted for determining the VAT deduction right. The Den Bosch Court of Appeal had ruled in favor of the interested party, but in cassation the Supreme Court ruled that the Den Bosch Court of Appeal had given too lenient an explanation of the actual use method. The Supreme Court also ruled that the interested party should have applied the actual use method to all mixed costs.
This case is relevant for financial institutions, but also for other taxpayers who perform VAT-taxed and VAT-exempt services, such as parties in the public sector, education and healthcare.
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