VAT deduction on taxed rental: burden of proof mixed use (studio/house)

• Additional VAT Assessment: The Tax and Customs Administration imposed an additional VAT assessment of €224,033 for the 2020 period on Fiscal Unit A, primarily due to the correction of input tax deductions for CP1 (a studio) and CP5 (sales/exhibition space), with a default penalty of €5,514.
• Court Ruling on CP1: The District Court of Gelderland upheld the correction of input VAT for CP1, ruling that the tenant’s use did not meet the 90% threshold for taxed supplies, as the tenants were not registered as taxable entrepreneurs for VAT purposes.
• Mitigation of Default Penalty: While the court upheld the default penalty, it reduced it by 15% to €4,686 due to the unreasonable delay in the assessment process, noting that the case hinged on factual assessments rather than legal interpretations.

Source BTW Jurisprudentie

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No VAT Deduction for New Atelier House Construction, Court Rules Against Taxable Rental Option

The Gelderland District Court ruled that a property company’s choice to apply VAT to the rental of a studio apartment was incorrect. In 2016, the company, identified as Fiscal Unit X1 BV, built a complex that included the apartment, which it rented to a couple starting in November 2020 with a VAT charge. The tax inspector challenged this, leading to a tax reassessment of €126,820 and a penalty of €4,686, which the court upheld. The court found that as an active real estate company, X1 BV should have known that charging VAT for a residence where more than half of the space was used for living was not permitted.

Source: taxlive.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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