Netherlands Supreme Court Decision: Qualification of Land for VAT Purposes

• The Dutch Supreme Court ruled that a plot of land with a retaining wall is considered undeveloped for VAT purposes.
• The qualification of land as developed or undeveloped is important for VAT purposes.
• Developed land is usually VAT-exempt, while undeveloped land may be subject to VAT.
• The lower courts had previously considered the land as developed because it couldn’t exist without the retaining wall.
• The Supreme Court determined that the wall was negligible compared to the undeveloped part of the land.
• The entire plot was therefore considered undeveloped land.
• The analysis involved assessing if the land was linked to the building and if the building was negligible compared to the undeveloped part.
• If a plot cannot be divided artificially, it may be treated differently for VAT purposes.
• If undeveloped land is intended to be developed, it is subject to VAT and exempt from real estate transfer tax.

Source:

• kpmg.com
• Deloitte

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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