Court Ruling on Entrepreneurship and VAT Grouping: Case of Financial Interconnection Dispute

• The court case was held at Gerechtshof Arnhem-Leeuwarden on June 3, 2025.
• The case involves the definition of entrepreneurship under the Dutch VAT law.
• An entrepreneur is defined as anyone who independently conducts a business.
• The VAT directive defines a taxable person as anyone conducting an economic activity independently.
• Economic activities include manufacturing, trading, and service provision.
• The case established that the individual involved lent money and received interest, qualifying as an economic activity.
• The individual is considered an entrepreneur for VAT purposes.
• The individual claims to form a VAT fiscal unity with two other entities since 2018.
• The tax inspector disputes the financial interdependence required for a fiscal unity.
• A fiscal unity requires financial, organizational, and economic interdependence.
• The court must assess the interdependence to determine if a fiscal unity exists.

Source: uitspraken.rechtspraak.nl

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No VAT group and no deduction for depositary receipt holder without voting rights

• Court Ruling on VAT Grouping: The Arnhem-Leeuwarden Court of Appeal determined that a BV cannot form a VAT group with its subsidiaries due to a lack of financial interconnectedness, as voting rights were held by directors of trust offices, not the BV itself.
• Rejection of Fiscal Unity Application: The court ruled that the absence of shared control over shares and income means the BV does not meet the criteria for fiscal unity for turnover tax purposes, leading to the rejection of the BV’s application for VAT grouping.
• Input VAT Deduction Denied: The BV was found ineligible to deduct input VAT because its activities, including providing interest-free loans and unpaid management services, did not involve any taxable services, reinforcing the ruling against VAT deductions in this context.

Source Taxence

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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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