Rental of attic space for a house that is exempt from VAT

Economic Activity Determination: The Court ruled that the rental of part of the house constitutes an economic activity, categorizing X as a VAT entrepreneur. However, X failed to demonstrate that the rented premises were used exclusively for business purposes.
VAT Taxation and Deductions: Since X cannot prove exclusive business use, it cannot opt for VAT-taxed rental, and therefore, is not entitled to deduct the VAT on the construction costs of the house. The presence of personal items, like the washing machine and dryer, further supports this conclusion.
VAT-Exempt Rental: The rental of the attic and the parking space is considered a single VAT-exempt service, as the parking space is closely related to the workspace use. Consequently, the appeal by X was deemed unfounded, affirming the ruling against the deduction of VAT.

No VAT Deduction for Exempt Rental by Partnership to BV, Court Den Bosch 2025

A partnership (X), consisting of A and B, rented a portion of their home to a private company (bv) in which A is a shareholder. X sought to deduct the input VAT on the construction costs of the house, but the Inspector denied this deduction. The Court of Appeal in Den Bosch ruled that the rental also qualifies as private residential use, thus precluding taxable rental. Furthermore, the rental of the parking space was also considered part of the exempt residential rental. Consequently, the deduction of input VAT was rightfully refused, and the appeal was dismissed.

Source: nlfiscaal.nl

ECJ Case referred to: C-520/14 (Gemeente Borsele and Staatssecretaris van Financiën) – An authority providing transport services for schoolchildren is not a taxable person – VATupdate