the Netherlands

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Deductibility of transformation costs for national monuments to housing

  • A fiscal unity consists of three companies involved in the development of an estate
  • Seven national monuments are being transformed into homes
  • One of the companies provides both VAT-exempt built-up plots and apartment rights, as well as VAT-taxable undeveloped building plots and apartment rights
  • The company deducts VAT on costs directly related to taxable supplies
  • VAT on costs not directly attributable to taxable or exempt supplies is deducted pro rata based on the destination of the real estate at the time the VAT is charged
  • The company determines the pro rata of VAT on costs based on the budget with future taxable and exempt supplies
  • The inspector believes that the company should base the pro rata on the ultimately realized supplies and denies VAT refund
  • The court rules that the company has correctly determined the VAT deduction on transformation costs
  • VAT refund must be granted.


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.


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