VAT Deduction for Share Transactions: New Rules in the Netherlands

• The decision on the deduction of VAT was amended on November 26, 2024.
• The amendment includes new provisions on transactions related to shares.
• The amendment will come into effect on July 1, 2025.
• The amendment includes new provisions on the deduction of VAT in relation to transactions in shares.
• The 2004 decision, which contains specific rules for the levy of VAT on the sale of shares, is repealed.
• The amendment includes steps to determine whether VAT on costs relating to share transactions is deductible.
• The acquisition, holding, issuance, and sale of shares must be in the capacity of a VAT entrepreneur.
• Shares are considered a direct, durable, and necessary extension of the entrepreneur’s economic activity.
• If these situations do not apply, the shares are held for investment purposes only and VAT on costs is not deductible.
• If transactions concerning shares take place in the capacity of a VAT entrepreneur, VAT on costs in the context of the sale of shares is not deductible if there are directly attributable costs.
• The sale of shares is a VAT-exempt service.
• VAT is deductible if the person to whom the shares are delivered is established outside the EU.
• Costs are generally attributable to the share transaction if they were incurred prior to the share transaction.
• If the costs were incurred after the share transaction, the costs are generally not attributable to the share transaction.
• If costs are not directly attributable to the sale of shares, there is a pro rata right to deduct input VAT.
• This is only possible in scenarios 1 or 2.
• If there are ancillary financial transactions, the proceeds from the sale of the shares do not need to be included in the pro rata calculation, and full VAT deduction is possible.
• Investment companies with private equity must include the proceeds from the sale of the shares in the pro rata calculation.
• This may result in a very limited right to deduct VAT.
• Discussions are expected to be held in practice about which costs qualify as directly attributable costs (no VAT deduction) and which costs qualify as general costs (pro rata deduction).
• Discussions are also expected to be held about whether the proceeds from the sale should be included in the pro rata calculation.

Source: vanoers.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.