Court of Justice Rules on VAT for Intra-Group Services and Evidence Requirements for Deductions

• The Court of Justice ruled that compensation for specified group services provided by a parent company to its subsidiary falls under VAT if calculated according to OECD guidelines and exceeds a certain profit margin.
• There must be a legal relationship with mutual obligations, and the compensation must be the actual consideration for identifiable services providing a concrete benefit.
• A direct link between the service provided and the compensation received is required, considering economic and commercial reality.
• The variable nature of compensation does not affect the direct link if the calculation method is predetermined and precise.
• Regarding VAT deduction, tax authorities can require additional documents beyond the invoice to prove services were performed and used for taxable activities.
• The presence of an invoice is necessary for formal purposes, but deduction cannot be denied solely due to formal invoice deficiencies if all necessary data is available.
• Material conditions include the actual performance of services and their use for taxable activities.
• Tax authorities can request evidence but cannot require proof of necessity or economic viability of services for deduction.
• The burden of proof lies with the taxpayer, and required evidence must be necessary and proportionate.

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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