- Many VAT-exempt professionals, such as dentists, establish joint enterprises in the form of a BV or NV, each operating their own salary policy through separate holding companies.
- However, this setup presents a VAT challenge, as the work company has to pay VAT on the monthly fees to the holdings, which cannot be deducted, increasing costs.
- To address this, a management partnership between the holdings may be considered, providing management services to the work company and forming a VAT fiscal unity to avoid VAT taxation on the management fee and profit distribution.
- The Dutch Tax Authorities have opposed these structures in recent years, arguing against financial interdependence between the management partnership and the work company, preventing the formation of a VAT fiscal unity.
- The ongoing EU case C-288/22 (TP) might provide a solution, as the Advocate General suggests that a board member receiving compensation from various companies is not liable for VAT, as the activities of mandatory corporate bodies should remain outside of VAT.
- The principle of VAT neutrality suggests that businesses with limited VAT deduction rights operating within a corporation should not be more heavily taxed than a comparable sole proprietorship.
Source: taxlive.nl
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
