VAT Deduction and Revenue Allocation for national library organization

A national library organization (”Stakeholder”), is not entitled to fully deduct input VAT as it performs both economic activities and non-economic activities under its legal mandate, and the costs must be split accordingly.

– Stakeholder is a public law entity (ZBO) with specific legal tasks defined in the Higher Education and Research Act (WHW) and the Public Library Facilities Act (WSOB).
– Stekeholder’s legal tasks are fully funded by government subsidies, with some additional revenue from membership fees, sales, and other services.
– Stakeholder’s legal tasks are considered to be performed “as a public authority” and are not considered economic activities.

– Alongside its legal tasks, Stakeholder also performs some economic activities such as selling publications, providing digital memberships, and personnel secondment.
– For these economic activities, Stekeholder is entitled to deduct input VAT, but the deduction must be split between the economic and non-economic activities.
– Stakeholder failed to properly administer the split between economic and non-economic activities, so the court had to determine a reasonable split based on the ratio of taxable revenue to total revenue (including subsidies).

– In 2019, the deductible input VAT is calculated as 0.8% of the total input VAT, based on the ratio of taxable revenue to total revenue.
– In 2020, the deductible input VAT is calculated as 1.1% of the total input VAT, as the total revenue was insufficient to cover the total costs.
– The court ordered the tax authority to provide additional VAT refunds based on these percentages.

Source:

• • uitspraken.rechtspraak.nl
  • Taxlive

 

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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