VAT on purchase of an apartment for residential purposes and rent it to a subsidiary as office space is not deductible

X bv bought an apartment for residential purposes and rented it to a subsidiary as office space, opting for taxable rental. However, the Northern Netherlands District Court ruled that X bv failed to provide sufficient evidence that the apartment was only used for business purposes, and therefore it qualifies as a home. As a result, X bv cannot deduct input tax for the purchase of the apartment and the rental is exempt from VAT. X bv’s appeal was unsuccessful.

Source Taxlive

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