In a recent case before the Court of The Hague, it was determined that a value-added tax (VAT) entrepreneur does not have to extensively verify their supplier to the extent of assuming the tax authority’s control responsibilities. The case involved a company that sold mobile phones, tablets, laptops, and accessories, and also facilitated contracts between customers and telecom service providers. The tax authority had denied the company’s input tax deduction, arguing that the company had insufficient proof of the acquisition of store inventory. However, the court ruled in favor of the company, stating that certain circumstances made it plausible that the inventory had indeed been acquired, and the company should not be burdened with complex verification processes that effectively transfer the tax authority’s control responsibilities to the company. The court also found the company’s explanation regarding cash payments received during celebratory events to be credible. Ultimately, the court concluded that the tax authority had wrongly denied the input tax deduction.
Source: taxence.nl
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