Supreme Court Ruling: When Cost Reimbursement is Exempt from VAT in Business Transactions

Re-invoicing involves reselling a service without adding a margin, typically at cost.
Conditions for re-invoicing include purchasing a service in one’s name for another entity, the other entity being the actual beneficiary, and a direct link between service and payment.
Under the VAT Act, re-invoicing is considered the supply of services.
Reimbursement of costs is not re-invoicing if expenses are incurred for the entity that paid them and serve as compensation or damages.
Such reimbursements are not subject to VAT as no service is rendered.
Article 29a(7)(3) of the VAT Act covers reimbursement of documented expenses incurred on behalf of another, not subject to VAT.
The Supreme Administrative Court ruled that cost reimbursement is not always documented by re-invoice.
A case involved a former shareholder reimbursing a company for advisory service costs.
The court ruled the company was the beneficiary of the services, not the shareholder, and reimbursement was not a taxable service.

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.