Dutch Supreme Court Upholds Territorial Limits on VAT Grouping, Affirms Freedom of Establishment

• X is a fiscal entity for VAT in the Netherlands and incurs concern costs from related companies in Germany
• X argues that VAT charges on these concern costs in the Netherlands violate the freedom of establishment under Article 49 VWEU
• X claims that if the German companies were based in the Netherlands, they could be part of the Dutch fiscal entity, exempting the concern costs from Dutch VAT
• The Hague District Court found no restriction on the freedom of establishment
• The Hague Court of Appeals ruled against X, citing EU jurisprudence and the nature of the VAT Directive which opposes X’s arguments
• X filed an appeal to the Supreme Court, challenging the Appeals Court’s interpretation of the freedom of establishment and its failure to consider the per-element approach
• The Supreme Court dismissed the appeal, stating the territorial restriction does not unlawfully hinder the freedoms of movement and is integral to the VAT group regime
• The decision aligns with the conclusion of Advocate General Ettema

Source: nlfiscaal.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.

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