No Full Right to VAT Deduction for Portfolio Management of Securities Holdings

• No full right to deduct VAT for asset management of securities portfolio
• Case involves a company performing advisory services and holding a large securities portfolio managed by banks
• Company initially deducts all VAT charged to it
• Tax inspector corrects the deduction: fully corrects VAT on asset management costs and 50% on general costs
• Company argues the portfolio is related to its taxable activities
• Court rules holding a securities portfolio is not an economic activity for VAT purposes
• Portfolio not proven to be a direct, necessary extension of taxable advisory services
• VAT on general costs only partially deductible based on revenue ratio between economic and non-economic activities
• Inspector’s 50% pre pro rata approach is accepted by the court
• Case highlights impact of holding a securities portfolio on VAT deduction rights
• Companies must carefully assess VAT treatment of costs when holding a securities portfolio alongside regular activities

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.

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