Entrepreneur Bound by Settlement Agreement in Tax Reassessment Case on Luxury Watches Sales

• VOF A operates a luxury watch and tile business since 2008.
• In 2016, VOF A primarily dealt in exclusive used and new watches, often purchased from Spain.
• The Dutch tax authorities found VOF A incorrectly applied the margin scheme for new watches bought with Spanish VAT.
• A settlement agreement was made in January 2017, acknowledging incorrect application of the margin scheme from 2011-2015.
• VOF A agreed to correctly split VAT on new and used watches from 2016 onwards.
• VOF A waived any damage claims and acknowledged the agreement was made without coercion.
• A tax assessment for 2016 was issued in 2021, based on a VAT balance debt of €23,355 in VOF A’s records.
• VOF A argued the assessment was incorrect and claimed a prior agreement prevented additional tax.
• VOF A also sought to void the settlement agreement, alleging coercion, and disputed the interest calculation.
• The Court of Appeal upheld the lower court’s decision, rejecting VOF A’s claims.
• The court found VOF A did not adequately summon witnesses and deemed their testimony unnecessary.
• The court ruled the settlement agreement nullified any prior assurances and was not made under duress.
• The tax assessment was confirmed as accurate based on VOF A’s own accounting records.

Source: btwjurisprudentie.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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