A court in the Netherlands has ruled that a private equity fund that provided supervisory board members to its Bidco entities for remuneration does not qualify as a VAT taxable person and is not allowed to recover VAT on any costs. The court also decided that the fund did not engage in any economic activities for VAT purposes and therefore was not entitled to recover VAT on transaction costs. This decision creates uncertainty for organizations engaged in M&A activities and may result in more discussions with the Dutch tax authorities regarding the VAT treatment of transaction costs.
Source PwC
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