- Fiscal Unity Dispute: Advocate General Ettema argues that a group can only be considered to work together as a unit if the parties involved have mutually agreed to exercise financial control collectively and have acted accordingly. This was a central issue in the case regarding X BV, G BV, and M BV, where X BV claimed that they formed a fiscal unity, exempting them from VAT on services provided to M BV.
- Shareholding Structure: Messrs Z and I, who are 40% shareholders in X BV and 50% shareholders in G BV, do not hold a majority of shares in X BV. The Arnhem-Leeuwarden Court of Appeal found that this lack of majority shareholding indicated insufficient financial interconnectedness to establish a fiscal unity among the companies.
- Conclusion on Financial Control: Advocate General Ettema supports the Court of Appeal’s conclusion that Z and I did not operate as a unit exercising financial control over X BV, as their individual shareholdings prevented them from independently imposing their will on the company. Thus, the appeal from X BV is deemed unfounded, reinforcing the decision that no fiscal unity exists.
Source Taxlive
Financial Interdependence Requires Legally Enforceable Shareholder Agreements for Majority Control under Dutch VAT Law
- The case concerns when “financial interdependence” under art. 7(4) Wet OB can be established, specifically if a cooperating group of shareholders can form a majority interest.
- The Advocate General states that a majority interest can be attributed to such a group only if binding agreements exist for joint exercise of control.
- Financial interdependence requires that the majority of shares and control are actually in the same hands, proven by enforceable internal agreements.
- In this case, the taxpayer failed to prove legally enforceable voting agreements among shareholders during the relevant periods, so financial interdependence is lacking.
- Other complaints about legitimate expectations and legal certainty fail, as no promises were made and the law is sufficiently clear.
Source: uitspraken.rechtspraak.nl
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