No VAT group due to lack of majority of material control

• The Zeeland-West-Brabant District Court determined that X BV and Stichting X do not constitute a fiscal unity for turnover tax purposes due to a lack of financial interconnectedness, as Stichting X could not unilaterally impose decisions because of arbitration clauses in their agreements.
• Despite Stichting X holding a majority of shares in X BV, the involvement of Y BV in the dispute settlement process limited Stichting X’s control over management decisions, preventing the establishment of a fiscal unity.
• The court rejected X BV’s appeal against an additional VAT assessment for 2015, stating that the principle of legitimate expectations was not applicable since X BV failed to provide complete information in its request to form a fiscal unity, leading to the inspector’s decision being made without all relevant facts.

Source Taxlive

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Court Ruling: Does Majority Shareholding Constitute Financial Intertwinement Without Majority Control Rights?

• The court examined whether there is financial interdependence between the parties.
• Although [stichting] holds 51% of the shares and voting rights, the court found that this alone does not establish financial interdependence.
• Due to a dispute resolution arrangement, [stichting] cannot unilaterally impose its will on [bv] regarding key decisions.
• The arbitration tribunal, not [stichting], has the final say in case of disputes, limiting [stichting]’s control.
• Therefore, the court concluded that there is no financial interdependence as [stichting] lacks majority control over decision-making.

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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