No deduction of input tax for private advisory fees shareholders

• Input VAT Deduction Denied: The court ruled that X BV cannot deduct input VAT on consultancy costs related to tax advice for family business succession, as these costs are classified as private expenses of the shareholders, lacking a direct link to the company’s taxable activities.
• Assessment of Consultancy Costs: X BV had deducted significant amounts as input tax for consultancy services, but the court determined these expenses did not qualify as business expenses for the company, leading to additional VAT assessments for the periods in question.
• Legal Precedent Cited: The ruling emphasized that a mere causal link between the expenses and the company’s activities is insufficient for VAT deduction eligibility, aligning with established case law from the Court of Justice of the European Union. Consequently, X BV’s appeals against the tax assessments were declared unfounded.

Source Taxlive

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• The court case is from Rechtbank Zeeland-West-Brabant, dated 22-08-2025
• The issue is whether there is a right to deduct input tax
• Input tax can be deducted if there is a direct link between the service or goods received and the taxable activities or if the costs are part of general expenses
• The burden of proof for the right to deduct input tax lies with the taxpayer
• The taxpayer claims to be the recipient of advisory services and that these costs are part of their taxable economic activity
• The inspector argues there is no direct link between the advisory services and the taxpayer’s taxable activities
• The court previously ruled that the advisory costs are personal expenses of shareholders, not business expenses of the taxpayer
• The court finds no direct link between the advisory costs and the taxpayer’s economic activity
• The taxpayer is not entitled to deduct input tax

Source: uitspraken.rechtspraak.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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